Wall Street rises as materials and crypto stocks offset continued bond sell-off
Investing.com - Today's nonfarm payrolls print above 150,000 could push the S&P 500 down nearly 2%, according to JPMorgan Market Intelligence, as stronger hiring would cement higher-for-longer Federal Reserve pricing and put fresh upward pressure on Treasury yields
.
The index has been trading near record highs in the first week of August, driven by AI-linked earnings optimism, but has given back small amounts in the two sessions since, leaving it vulnerable to a hawkish data shock ahead of Friday's open.
JPMorgan's team, led by Andrew Tyler, assigns 65% odds to the economy adding more than 60,000 jobs in July. In that scenario, the "good news is bad news" dynamic takes hold: robust payrolls would all but rule out near-term rate cuts and raise the probability of another hike.
"With yields and inflation still the key risks for stocks, we expect Friday's NFP to trade as a 'good news is bad news' print: a strong jobs number would reinforce higher-for-longer pricing and put upward pressure on rates," Tyler wrote in the note.
The softer side of JPMorgan's scenario table offers only modest relief. The team puts a 25% probability on payrolls landing between 20,000 and 60,000 jobs, a range it sees lifting the S&P 500 by as much as 0.8% as yields ease and rate-cut expectations revive.
Economists polled by Bloomberg expect a median gain of 80,000 jobs in July, up from June's 57,000, with the unemployment rate forecast to hold steady at 4.2%. That consensus sits squarely in contested territory — strong enough to keep higher-for-longer fears alive, yet soft enough that a modest miss could still shift rate pricing toward an easing tilt.
Weak signals from the private sector have already set a cautious tone. ADP reported on August 5 that private employers added just 44,000 jobs in July, well below the 68,000 forecast and down sharply from a revised 95,000 in June, marking the softest private hiring in six months.
Still, initial jobless claims for the latest week came in at 199,000, below the 203,000 forecast, suggesting the broader labour market has not deteriorated dramatically.
ISM Manufacturing PMI climbed to 55.6 in July, a four-year high, while the ISM Manufacturing Prices index printed at 71.1, both above their respective forecasts. That combination — accelerating activity alongside broadening price pressure, hands the Fed little cover to pivot dovish regardless of what payrolls show.
Fed Governor Lisa Cook reinforced that point in this week's speech in Anchorage, saying "I am prepared to act by raising rates, if necessary." PCE inflation was running at 3.7% year-over-year as of June, nearly double the Fed's 2% target.
The Fed held its target range at 3.5%-3.75% at its July meeting, but three officials dissented in favour of an immediate hike, and money markets remain split on whether the next move is a hold or a rise.
Fed Chair Kevin Warsh's refusal to offer forward guidance has made data prints like today's unusually consequential for market pricing.
