An already hectic, wild week for investors gets potentially more hairy today when the government releases figures on how many jobs were created last month. Heading into “Jobs Friday,” Wall Street is in an ebullient mood after a two-day, 536-point Dow rally, which not only wiped out all of the blue-chip gauge’s 461-point loss Monday and Tuesday, but also put it back into positive territory for 2015. The Dow heads into today’s trading session up 0.5% for the year after an early dip of 2.5%.
Stabilizing oil prices and hopes that European central bankers will soon announce more stimulus measures to boost eurozone growth brought investors back into the market. The market mood shift was summed up this way by Jim Paulsen, chief investment strategist at Wells Capital Management: “Earlier in the week, (the mentality was) who wants to be in the stock market when ‘Greece may be on the way out of the eurozone.’ And now it is who wants to be out of the stock market when ‘the jobs numbers will likely be good again tomorrow.’”
Wall Street is forecasting 230,000 to 240,000 new jobs, down from 321,000 in November, and a dip in the unemployment rate to 5.7%, from 5.8%. The market will likely react less violently if the report comes in without a major beat or disappointing miss. “An ideal job report … would be one that comes in around expectations,” says Liz Ann Sonders, chief investment strategist at Charles Schwab. A weak report, she says, might suggest weak growth abroad is starting to “infect” the U.S. In contrast, a stronger reading could spark a wage-inflation scare that could renew fears of a sooner-than-expected rate hike from the Federal Reserve, she says.
Wall Street is expecting the Fed to hike interest rates for the first time since 2006 around mid-year. Low rates, of course, have been a key driver of the bull market in stocks that began in March 2009. The Fed will also be looking at some of the nitty-gritty details of today’s jobs report, including employee wage gains and other data points that will provide a more accurate picture as to the health of the job market, Sonders adds.