JPMorgan Chase & Co.’s trading desk has some thoughts on the potential volatility in the stock market following Friday’s all-important jobs report. Friday’s nonfarm payrolls, unemployment and wage data are the last major economic data ahead of next week’s presidential election and Federal Reserve policy meeting. Economists surveyed by Dow Jones expect employment to increase by 100,000 in October and the unemployment rate to hold steady at 4.1%. JPMorgan has prepared for several scenarios on the payrolls number and how it could impact the stock market. Here’s a look at each of them, including how likely the trading desk thinks each is to happen: More than 200,000 new jobs; 5% chance: The S&P 500 could fall between 0.25% and rise 0.5%. Stocks may take an immediate hit as bonds move higher, but the negative impact should fade over the next few days. 120,000 to 200,000 new jobs; 30% chance: this is the so-called Goldilocks stamp. If wages aren’t growing, it could mean steady or higher job growth and no inflation. The S&P 500 should rise between 0.5% and 0.75%. 80,000 to 120,000 new jobs; 40% probability: This is the most likely scenario and growth prospects should remain unchanged. It should also keep its GDP growth forecast unchanged and cut interest rates by another 50 basis points in 2024. 20,000 to 80,000 new jobs; 20% chance: While this outcome could lead to a growth scare, the company said that could be mitigated by hopes of deeper interest rate cuts. Investors may also attribute the weak data to the impact of hurricanes and strikes. In this scenario, the S&P 500 would fall between 0.25% and 0.5%. Job creation below 20,000; 5% chance: This should trigger a massive sell-off, as negative non-farm payrolls data usually precedes a recession. The S&P 500 should correct back in a range of 0.75% to 1.5%.
