In the most likely scenario, JPMorgan traders expect the stock market to rise modestly after Friday’s jobs report. The non-agricultural sector employment statistics for December will reveal last month’s unemployment rate, the rate of increase in the labor market, and the rate of increase in workers’ wages. Depending on the data, it could have an impact on the next interest rate decision at the Federal Reserve’s meeting later this month. Economists polled by Dow Jones expect payrolls to rise by 54,000 jobs last month, slightly below November’s 64,000. The consensus also expects the unemployment rate to decline slightly in December, from 4.6% to 4.5%. In a note to clients on Wednesday, JPMorgan’s trading desk outlined several scenarios for Friday’s jobs report and analyzed how each scenario would move stock prices. Michael Feroli, JPMorgan’s chief U.S. economist, said he expects economic growth last month to add 75,000 jobs and the unemployment rate to remain flat at 4.6%. Part of the bank’s optimism about monthly job gains stems from the employment subindex of the National Federation of Independent Business Small Business Survey, which JPMorgan says typically serves as a leading indicator of nonfarm payrolls. “This sub-index has been trending upward since this summer. Although this may not be reflected in this week’s paper, we expect this trend to indicate an acceleration in hiring,” JPMorgan wrote. “Whether this hiring restart will lead to higher inflation remains to be seen.” The bank’s scenarios for Friday’s jobs report are listed below, along with the probability of each occurring: More than 105,000 jobs added, 5% probability: S&P 500 could fall 0.5% to 1%. Employers between 75,000 and 100,000, 25%: S&P 500 could rise 0.25% to 1%. Employers between 35,000 and 75,000, 40%: S&P could rise by 0.25% to 0.75%. Between 0 and 35,000 jobs, 25%: The S&P 500 can fluctuate between a 0.25% decline and a 0.5% increase. No jobs added, 5%: S&P 500 could fall 0.5% to 1.25%.
