What the market expects on Big Jobs Friday—jobs report—stock …
An important point is that no one wants to see are increases that occur too quickly, which could then be perceived as a negative because it will raise concerns about increasing inflation — a negative for stocks. Now remember, last month we saw an increase of 288,000 jobs, which some economists explained could be a one-off due to pent-up demand from the cold winter, something that wouldn’t likely happen in the next report. Traders loved it and caused the market to surge completely, buying into that spin.
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The ADP private-sector payrolls report showed 179,000 jobs were added last month, short of the 215,000 expected but the market discounted this…why? Well, like the Labor Department’s reading on nonfarm payrolls, analysts will average out three months so they get more of a trend. By doing so, we still have a number closer to 220,000 private-sector jobs created over that time span.
The same will be true for nonfarm payrolls — We would have to see a number like 160,000 jobs created to bring the three-month average below 200,000. This won’t happen. So, if I am right, even a report that shows 190,000 jobs created this month will still give us a trend of 225,000 jobs. This will not cause investors to change their outlook. A trend of +220,000 jobs is what is expected so in fact do not be surprised if you see a ‘buy the rumor/SELL the news event. A pullback on the S&P 500 to the 1900 level would not be a surprise.
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What the market expects on Big Jobs Friday—jobs report—stock …
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