The Market Brief
Hey team. U.S. stock index struggled for direction on Thursday as investors anticipate the monthly jobs report to gauge the impact of trade policies on the labor market.
Let’s discuss the potential scenarios of the upcoming NFP and see what’s ahead for this market!
Impact Snapshot
🟥 Unemployment Claims - 8:30am
Macro Viewpoint
US equity futures struggled for direction as investors awaited Friday’s payrolls report, following a series of data releases that offered varied signals on the health of the economy.
The wild swings in stocks that were sparked by the Trump administration’s tariff announcements in April, and the subsequent rebound, have given way to more subdued, two-way trading in recent weeks.
Market breadth charts also painting the picture that we’ve been in a low breadth tape.
Friday’s jobs report is expected to show that growth in nonfarm payrolls slowed and the unemployment rate remained steady.
NFP SCENARIO ANALYSIS
[5%] Above 170k. SPX gains 50bps to 2.5%. The first tail outcome and the reason for the widest range of outcomes is dependent on the bond market reaction.
[25%] Between 140k – 170k. SPX gains 1.5% – 2%.
[40%] Between 115k – 135k. SPX gains 25bps – 1%. The base case and even the lower end of the range is enough to keep this rally going, subject to the move in the unemployment rate.
[25%] Between 100k – 115k. SPX loses 1.25% to gains 50bps. The market’s next true test is when we see NFP print below 100k since many would then point to a recession as a foregone conclusion.
[5%] Below 100k. SPX loses 2% – 3%. The second tail outcome would likely end the current bull run. Recessions are the typical reason why bull markets end and a sub-100k print would put the entire market on ‘recession watch’.
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