How much impact will tonight's non-farm payroll have on the US stock market? Morgan Stanley presents 5 scenarios
JPMorgan Chase analyzed the impact of the upcoming U.S. January non-farm payroll data on the stock market, believing that the data needs to be moderate to support a rise in the stock market. If new jobs are below 150,000, the stock market will decline; if they exceed 230,000, it may increase pressure on interest rate hike expectations. The expected new jobs are 150,000, below market expectations. The S&P 500 index has risen 3.4% this year, but still lags behind global indices. The JPMorgan Chase team recommends buying on dips and is optimistic about the U.S. stock market in the long term
Zhitong Finance learned that JPMorgan Chase stated that the U.S. non-farm payroll data for January, to be released later on Friday, must be just right—neither too hot nor too cold—for the U.S. stock market to continue rising. The team led by Andrew Tyler at JPMorgan's trading department indicated that if the new non-farm jobs are below 150,000, the stock market will decline, while if the new non-farm jobs exceed 230,000, it will also put pressure on the stock market, as this would increase bets that the Federal Reserve would have to raise interest rates.
They noted that at the lower end of the range, the risk is that the cooling of the job market happens faster than expected, which would drag down consumer spending. They predict that a report as low as 110,000 would cause the S&P 500 index to drop by 1.5%, as it would indicate that concerns about global trade are seeping into the U.S. economy at a faster pace than anticipated.
Economists generally expect the new non-farm jobs to reach 175,000. JPMorgan economists predict that the new non-farm jobs will reach 150,000, below the expected average and also lower than last month's 256,000.
The S&P 500 index has risen 3.4% so far this year, less than the 4.9% increase of the MSCI global index excluding the U.S. After more than two years of strong rebounds, the U.S. stock market has lagged at the beginning of 2025 due to concerns over the overvaluation of large tech companies and the uncertainty brought by Trump's trade policies.
Tyler's team remains "tactically bullish" on the U.S. stock market and recommends buying on dips with a longer-term perspective. The team stated, "We believe that hiring will continue to accelerate, ultimately bringing the unemployment rate below 4%, having a similarly positive impact on spending, driving real GDP growth above 3%, and thus boosting income."