Today is Non-Farm Payroll night: If new jobs fall below 100,000, is the bull market in U.S. stocks in danger?

The prospects for global tariff negotiations are unclear, and the relationship between Musk and Trump has publicly deteriorated into a feud. Amid this chaos, Wall Street faces a critical test as the non-farm payroll data is set to be released tonight.

At 20:30 Beijing time on June 6, the U.S. Bureau of Labor Statistics (BLS) will release the May non-farm payroll report. The general consensus on Wall Street is:

Non-farm payrolls are expected to increase by 126,000, cooling from 177,000 in April, which is below the three-month average of 155,000, while the unemployment rate is expected to remain at 4.2% for the third consecutive month.

Year-on-year wage growth is expected to slightly decline, with average hourly earnings expected to increase by 0.3% month-on-month, up from 0.2% in April; year-on-year wage growth is expected to be 3.7%, down from 3.8%, which will continue to support consumer spending.

It is worth mentioning that analysts have a wide range of expectations, with new jobs projected between 75,000 and 190,000. Analysts believe that this year's job growth largely reflects companies hoarding labor. Regarding the current market focus—tariffs, DOGE, and immigration policy, analysts believe that tariffs will turn into "headwinds" for job growth, the impact of DOGE is limited but requires continued attention, and immigration restrictions will only manifest in the coming months.

Currently, the market has fully digested expectations for two rate cuts by the Federal Reserve this year. Analysts state that any unexpected upward movement could lead the market to no longer anticipate the next rate cut, while any unexpected downward movement could trigger concerns about a recession and affect risk assets. JP Morgan warns that 100,000 is a key psychological threshold for the market; if it falls below this level, the entire market will enter a "recession alert" state, and economic recession is a typical cause for the end of a bull market.

Job Growth Expected to Cool Slightly, Unemployment Rate Likely to Remain Stable

Despite the uncertainty caused by Trump's tariff measures, the U.S. labor market remains generally stable, with job growth expected to cool slightly.

Leading indicators support the trend of gradually slowing employment:

The ADP employment report is rather bleak, with only 37,000 jobs added in May, far below the expected 110,000, marking the lowest since March 2023. ADP bluntly stated that after a strong start, the hiring wave is dissipating.

Weekly initial jobless claims rose from 216,000 to 226,000, and the number of continuing claims also increased from 1.833 million to 1.919 million. Although the ISM manufacturing employment index improved, it remains in the contraction zone, staying below 50 for the fourth consecutive month.

By industry, the leisure and hospitality sector may drag down overall growth. Bloomberg economist Anna Wong stated that employment in this sector is expected to decrease by nearly 40,000 jobs. Another factor that may impact the May report is the weather; Jefferies economist Thomas Simons pointed out that rainfall in the East Coast and Southern regions was above average in May, which may have suppressed hiring in the leisure and construction sectors.

Regarding the unemployment rate, analysts generally expect it to remain unchanged at 4.2% for the third consecutive month. Economists and policymakers believe that the slowdown in immigration has led to a decrease in the number of new workers in the labor market, while at the same time, hiring activity is slowing, which helps to keep the unemployment rate in check Bill Adams from United States Trust Bank stated that due to a decrease in immigration, labor force growth will also slow down in 2025, thus less job growth can keep the unemployment rate stable.

In addition, the non-farm report will correct the data from the April employment report. Wall Street Insight previously mentioned, the Bureau of Labor Statistics noted in a statement on Tuesday that some of the estimated data for April 2025 will be corrected on June 6, 2025, due to a slight error in the weights related to the redesigned Current Population Survey sample. However, major labor indicators such as the unemployment rate, labor force participation rate, and employment-population ratio were not affected.

What is the impact of tariffs, DOGE, and immigration policies?

Currently, the market is particularly focused on the impact of tariffs, DOGE, and immigration policy factors on the job market.

Tariffs will turn into a "headwind" for job growth

Analysts at Pantheon Macroeconomics warned that the impact of the trade war on job growth may have shifted from "tailwind" to "headwind" last month. Economists generally expect that industries affected by trade will experience some weakness; the surge in imports in the first quarter had previously driven job increases in transportation and warehousing, retail, and wholesale trade, but this momentum has now largely faded.

Pantheon Macroeconomics pointed out that in the six months leading up to April (the date when Trump announced the imposition of most tariffs), these industries added nearly 200,000 jobs, but the company stated that the "rush to hire" before the tariffs may have peaked.

Limited impact of DOGE but requires ongoing attention

As Trump pushes for significant reductions in the size of the civil service and cuts in government spending, the U.S. government has laid off employees for three consecutive months. Canadian Imperial Bank of Commerce stated that over time, the likelihood of civil servants being laid off is increasing, but this may be "offset by hiring from state and local governments."

Goldman Sachs expects government jobs to increase by 10,000, with a decrease of 10,000 federal government jobs and an increase of 20,000 state and local government jobs. Although the number of announced federal layoffs far exceeds expectations, this has not yet been reflected in the report, as some announced layoffs have not yet been implemented, and some workers appear to have been placed on administrative leave, awaiting the outcome of the federal moratorium on their layoffs.

Immigration restrictions will have a lagging effect

Immigration restrictions are expected to have a negative impact on employment in the coming months, but the anticipated impact in May will not be significant.

Goldman Sachs economist Elsie Peng's data shows that since December 2024, the labor force participation rate of recent immigrants has risen from 65% to 67%, while the unemployment rate has fallen from 10% to 7%. However, she also warned that the corresponding ratio of recent immigrants in the household survey has also declined, raising concerns that the survey may have missed many undocumented immigrants who are afraid to go to work amid the intensified immigration crackdown

How will the market move? Less than 100,000: The "recession trade" script is unfolding, and the U.S. stock market bull market is nearing its end.

The money market has priced in expectations for two interest rate cuts this year, and analysts warn that any surprises could trigger violent reactions: stronger-than-expected data will eliminate rate cut expectations, while weak data could trigger panic and impact risk assets.

Goldman Sachs stated that the ideal employment data range for the U.S. stock market is 150,000 to 200,000 new jobs. A figure below 100,000 will raise recession concerns and put pressure on the U.S. stock market, while weak data will harm the stock market far more than overheating data. Here is Goldman Sachs' estimated reaction matrix:

• 150,000: S&P 500 up 1%

• 125,000—150,000: S&P 500 up 0.75%
• 100,000 – 125,000: S&P 500 up 0.5%
• 75,000 – 100,000: S&P 500 +/- 0.25%
• 50,000 – 75,000: S&P 500 down 0.75%
• <50,000: S&P 500 down 1.5%

JPMorgan Chase believes that the risk is skewed to the upside, and in the current macro environment where "good news is good news," their attitude is more optimistic. However, they also warn that if the figure is below 100,000, the "recession trade" script will unfold, and the U.S. stock market bull market will come to an end:

170,000 (5% probability): S&P 500 up 0.5%—2.5%, and 250,000 will be seen as a signal of economic re-acceleration, leading to a repricing in the bond market.

140,000—170,000 (25%): The "golden girl" range, S&P 500 up 1.5%—2%.

115,000—135,000 (40%): Baseline scenario, S&P 500 up 0.25%—1%. However, if the unemployment rate exceeds 4.3%, performance will trend toward the lower end of the range.

100,000—115,000 (25%): S&P 500 down 1.25%—up 0.5%. The market will closely watch whether it falls below the psychological threshold of 100,000.

<100,000 (5%): This could potentially end the current bull market, as economic recession is a typical reason for the end of a bull market. A figure below 100,000 will put the entire market into a "recession alert" state, with the S&P 500 down 2% to 3%