🥇 First rule of investing? Know when to save! Up to 55% off InvestingPro before BLACK FRIDAYCLAIM SALE

NFP Preview – How Could the S&P 500 React to Key Jobs Report?

Published 10/04/2024, 06:30 AM
NDX
-
US500
-
  • US Non-Farm Payroll (NFP) data release is highly anticipated amidst shifting expectations of a Fed rate cut.
  • Market predictions for the NFP report vary, with analysts split on expected figures.
  • S&P 500 technical analysis reveals a bullish triangle pattern, will the bulls finish the week strong?

NFP Preview: What to Expect

Market participants are waiting on today’s jobs report from the US in a week that has seen geopolitical risk take hold of market sentiment. The Iranian attack on Israel which came without much warning really seemed to spook markets and continues to play a role in Oil and Gold prices in particular. This begs the question… will the jobs report be overshadowed by the geopolitical risk?

Heading into the jobs report and market expectations have seen a significant shift this week following pushback from Fed Chair Powell and others around another 50 bps cut in November. This has seen markets aggressively price in a 25 bps cut which has led to a revival of sorts for the US Dollar.

The expected payroll figure is 150k, but more attention should be given to the unemployment rate, which is anticipated to remain steady at 4.2%. A slight miss of these expected figures is unlikely to change the Fed outlook but could lead to some short-term spikes across a host of markets.

The data is likely to face scrutiny given that we have seen 16 of the last 19 job reports face a downward revision. This is unprecedented as the 2008 financial crisis did not result in as many downgrades as we have seen this year. Analysts already seem to be split on the print they expect, with UBS and Goldman Sachs predicting 180k and 165k respectively.

Kalshi and Factset however are on the more moderate end of the prediction scale, eyeing a print of 148k and 140k respectively. Nonfarm Payrolls Net Revisions

Source: BLS, Haver Analytics, BofA Research, Kobeissi Letter

My takeaway from all of this is that we would need to see a significant miss or downward revision to the jobs numbers for any significant movements to take place today. Anything else is likely to result in short-term spikes with little to no follow through.

There are a host of assets that are hovering near key areas of support and resistance which is why the NFP report is still being closely watched. The US Dollar Index (DXY), EUR/USD, GBP/USD and Gold are among those assets trading near or at key levels.

As for US Equities, the Nasdaq 100 and S&P 500 are also near recent highs and have also retreated following Powell’s comments this week. The threat of regional war in the Middle East and potential threats to supply chains and oil prices are also keeping markets on edge.

Potential Impact on the S&P 500

Looking at the data release, I have compiled a list of what the potential impact on the S&P 500 could be depending on the wage growth and NFP number.

This is just my expectations and no guarantee that this is the reaction we may get from markets but could be a useful guide.

Potential Impact on the S&P 500

able Created by Zain Vawda

Technical Analysis S&P 500

Looking at the S&P 500 chart below and the pullback this week has actually been a positive for potential bulls looking to get involved.

The technical triangle pattern which saw a breakout last week is still in play and following the pullback may be ready to continue its move higher. The NFP may just be the catalyst needed to give the S&P the impetus for further upside.

S&P 500 Daily Chart, October 4, 2024S&P 500 Daily Chart

Source: TradingView

Support

  • 5669
  • 5635
  • 5538

Resistance

  • 5760
  • 5910
  • 6000

Original Post

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.