JPMorgan’s market intelligence team said the S&P 500 is more likely to weaken after Friday’s U.S. nonfarm payrolls release. The team, led by Andrew Tyler, expects a "good news is bad news" setup after the data and said payroll growth of 30,000 to 70,000 would be the market’s sweet spot. Analysts are currently looking for an increase of 55,000 jobs. In the team’s view, a stronger-than-expected payrolls print could lift bond yields and weigh on equities, as firmer hiring would imply stronger consumption and reinforce corporate confidence to keep adding workers. At the same time, JPMorgan said a reading far below expectations, including another outright decline in jobs, could revive concerns about stagflation. The note lays out a market framework for how stocks may react across different payroll outcomes rather than pointing to a single direction for the economy itself.
JPMorgan’s market intelligence team said the S&P 500 is more likely to move lower after Friday’s U.S. nonfarm payrolls report.
The team, led by Andrew Tyler, said the market could face a "good news is bad news" setup once the employment data is released. It added that payroll growth in the range of 30,000 to 70,000 would be the market’s sweet spot. Analysts are currently expecting an increase of 55,000 jobs.
In the report, the team wrote, "A stronger nonfarm payrolls number could push bond yields higher and weigh on equities. The logic is that more job creation would bring more consumption, and that broader strength would also strengthen corporate confidence to keep hiring."
JPMorgan also said that if the data comes in well below expectations, for example with another decline in employment, it could bring back market concerns over stagflation.
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