Friday’s jobs report is just about guaranteed to be a market-moving event, and investors can trade the different outcomes for what could happen, according to Goldman Sachs. The November nonfarm payrolls report will be the last major piece of economic data this year, and could determine whether investors will get one more interest rate cut this month when the Federal Reserve convenes for its Dec. 17-18 meeting. Investors are assured a quarter-point cut is on the way, even after some trepidation last month . Markets are pricing in a roughly 75% chance of a reduction, the CME FedWatch Tool shows, and Fed officials in recent days have issued some dovish comments . But a surprisingly hot number in Friday’s report could jeopardize those expectations of loosening policy, and it could roil the equity market. Economists polled by Dow Jones expect the U.S. economy to have added 214,000 jobs last month. “I think the sweet spot for stocks is 150k – 200k as mkt is ready for a significant rebound from October’s ugly print with hurricane and strike headwinds now behind us,” said John Flood, head of Americas equities sales trading for Goldman Sachs Global Banking & Markets, in a Tuesday note. “The stock market does NOT want to see a number north of 275k as surprisingly hot data will afford Jay Pow and team the flexibility to sit on the sidelines at the 12/18 meeting (and take a wait and see approach into 2025),” he continued. “Yes, we have temporarily returned to a bad data (but not too bad) is good for stocks setup.” Goldman Sachs broke down six scenarios for how stocks could trade after Friday’s jobs report. Here’s what could happen. A number greater than 275,000 could mean the S & P 500 sells off at least 1% A number between 235,000 and 275,000 could result in the S & P 500 falling 0.5% to 1% A number between 200,000 and 235,000 may lead to the S & P 500 gaining or losing 0.5% A number between 150,000 and 200,000 could lead to the S & P 500 rising 0.5% to 1% A number between 100,000 and 150,000 may result in the S & P 500 moving between 0% and a 1% gain A number below 100,000 could spur a swing between 0% and a 0.5% decline for the S & P 500 In Flood’s “sweet spot” scenario, of a number between 150,000 and 200,000, the S & P 500 is expected to rally 0.5% to 1% following the report, according to this breakdown. However, his official stance assumes a 235,000 nonfarm payrolls increase, a figure that implies stocks are likely to sell off Friday.
How the S&P 500 may react to different scenarios