Stock market crash fears are elevated ahead of this Friday’s make-or-break jobs report. Indeed, November jobs data is due this Friday, Dec. 8. The results will likely inform any “soft” or “hard” landing narratives for weeks to come.
So, what do you need to know about this week’s major market mover?
Well, in part due to the end of the the United Auto Workers (UAW) strike, job growth is expected to increase in November to 180,000 added jobs, up from 150,000 in October. This would reflect unemployment of 3.9% in November, unchanged from the month prior. Notably, average hourly wages are expected to grow at 4% over the month, slightly less than in October, per Bloomberg.
The markets are really eyeng a “Goldilocks” reading. That is, a jobs report that isn’t so hot that the Federal Reserve is tempted to raise rates again and not soft enough to suggest that a recession is imminent.
When jobs are strong, spending tends to follow suit, which in this case would actually be detrimental to the Fed’s 2% inflation goal. However, if unemployment is too weak, it would likely indicate that the country is on the precipice of a recession. That’s something no one wants.
Will Friday’s Jobs Report Trigger a Stock Market Crash?
Equity markets have shown some pensiveness ahead of this week’s jobs data release. The Nasdaq Composite and S&P 500 each fell between 0.5% and 1% on Monday.
There are a number of potential drivers behind yesterday’s dip. These include jobs uncertainty, Fed Chair Jerome Powell’s hawkish commentary last Friday, or simply traders testing last week’s high.
In a speech Friday, Powell offered a sharp counter to notions of rate cuts to come.
“It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease,” Powell said in a speech at Spelman College. “While the lower inflation readings of the past few months are welcome, that progress must continue if we are to reach our 2% objective.”
Powell’s comments come as a pointed rebuke of the dovish narrative that has dominated the market in the wake of last week’s rosy Personal Consumption Expenditures (PCE) inflation report. While Powell’s statement has tempered expectations somewhat, Treasury traders are still pricing in a nearly 50% chance of a rate cut by March, according to the CME FedWatch tool.
Traders may also be showing some technical resistance to the strength in stocks recently. Indeed, after dipping in October, equities have been rallying, recovering losses and then some. In fact, the S&P and Nasdaq closed at their highest levels all year on Friday, capping off five-straight weeks of gains.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
