Wall Street is looking for a jobs report number Friday that will hit the sweet spot. Investors are fretful heading into the August payrolls report. The S & P 500 recently topped 6,500 in part because of hopes of easing monetary policy. That means Friday’s jobs data will have to do two things: Come in cool enough to justify an October rate cut Not be so disappointing that it spurs fears of economic weakness An “ideal” range could be between 70,000 to 95,000, a softer number that nevertheless fulfills those two requirements, according to Adam Crisafulli of Vital Knowledge. It could also be what Wall Street winds up getting. Economists polled by Dow Jones were last anticipating nonfarm payrolls to have risen by 75,000 in August. It’s marginally higher than the 73,000 figure that alarmed investors in the July jobs report. If the jobs number comes in outside of that range Friday, stocks could be in for a bumpy ride. Equities are virtually priced to perfection in a month that’s defined by its historic weakness, with investors navigating whirlwind headlines out of the White House, on top of macroeconomic concerns. Luke Tilley, chief economist at Wilmington Trust, worries a downside surprise is coming in the jobs data. The economist is projecting nonfarm payrolls growth of 75,000 in August but added he expects a negative number is on its way — potentially even this week. “We’re bracing for negative numbers in the second half of the year, and that very well could come [on Friday],” Tilley said. .SPX YTD mountain SPX year to date “I do think that if you start to see that downside risk scenario — I’m talking about possibly negative jobs — if that were to happen, then I think you would see a little bit of weakness in markets, because a lot of what has been driving it is the expectation that the consumer is doing okay, and that we won’t have that much economic weakness,” Tilley added. “And I think my broader concern is that if an economic slowdown was more pronounced than is currently expected, it would start hitting everything.” The economist said an emerging pattern of firms abstaining from firing or hiring employees has troubling implications for the labor market. He said there’s a 50% chance of a recession coming in the next 12 months. He is neutral on equities On the other hand, KKM Financial investment chief Jeff Kilburg worries an upside surprise could be in store, one that could knock current market expectations of three quarter-point cuts coming between now and year’s end. “I think the surprise, or the risk, in the jobs number is a really stronger than expected [number], or another revision that would surprise, but to the upside,” Kilburg said. “And that could get people to take out that third 25 basis point rate cut in December, or take out that October potential 25 basis point rate cut.”
