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The November jobs report is approaching, and it could make or break the market’s week. Economists polled by Dow Jones expect the Bureau of Labor Statistics to report that employers added 190,000 jobs last month. That would be up from 150,000 in October. The monthly nonfarms payrolls report, slated for release Friday at 8:30 a.m. ET, comes as the market struggles to maintain its recent momentum. The Dow Jones Industrial Average and S & P 500 are on pace to snap a five week winning streak. The report may exacerbate this week’s losses, or it could help the market shake off its slow December start. Against this backdrop, Goldman Sachs’ trading desk laid out how it sees the S & P 500 trading based on how many jobs were created: More than 250,000 jobs created: Goldman traders expect such a report to spark a decline of at least 0.5%. A print like this would likely spark fears that more Federal Reserve rate hikes are needed to tame inflation. Between 200,000 and 250,000 jobs created: The bank’s trading desk sees the S & P 500 falling between 0.25% and 0.5% in this scenario. As in the first outcome, investors would be concerned over the prospects of tighter monetary policy, but to a lesser extent. Between 150,000 and 200,000 jobs created: This may be the sweet spot for the market. Goldman expects the S & P 500 to rise, or fall, around 0.25% with a print like this. Between 50,000 and 150,000 jobs created: The market would rally more than 1% in this outcome, as it would signal that further tightening may not be needed. Less than 50,000 jobs created: This outcome would signal a sharp economic slowdown, which would lead to a loss of at least 0.5% for the S & P 500. “The U.S. employment report Friday will clearly be a very important data point for global markets,” Goldman traders wrote. A strong report will likely lead to “a reversal of recent market moves and reduce fears of an economic slowdown,” spurring the market to “reprice the odds of a [Fed rate] cut by March back to about 50/50.” In the event of a weak jobs report, “the market will likely sharply extend recent moves and may even start entertaining questions such as a potential January Fed cut or whether a March cut could be 50bps,” they wrote.
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