Goldman Sachs believes that the non-farm payroll report to be released on Friday is almost certain to be an event that will affect market direction, and investors can trade based on the different possible outcomes.
The November non-farm payroll report in the United States will be the last important economic data of the year, which may determine whether the Federal Reserve will cut interest rates again at its meeting on December 17-18 this month.
Even though there was some anxiety last month, investors are currently confident that the Federal Reserve will cut rates by another 25 basis points this month. The CME FedWatch Tool shows that the market believes there is about a 75% chance of a rate cut in December, and Federal Reserve officials have also made some dovish or hawkish comments in recent days. However, if an unexpectedly strong number appears in Friday's non-farm report, it could jeopardize expectations for these easing policies and potentially disrupt the stock market.
Economists surveyed by Dow Jones expect the U.S. economy to add 214,000 jobs in November.
John Flood, head of Americas equity sales trading at Goldman Sachs Global Banking and Markets, said in a report on Tuesday: “I think the sweet spot for non-farm payrolls is between 150,000 and 200,000. The market is ready for a significant rebound in non-farm data from the poor performance in October, as the adverse factors from the previous hurricanes and strikes have passed.”
He continued: “The stock market does not want to see non-farm payrolls above 275,000, as unexpectedly hot data would provide Powell and his team with the flexibility to remain cautious at the December meeting (and prompt them to adopt a wait-and-see attitude for 2025 as well).”
“Yes, we are temporarily back to a scenario where bad data (but not too bad) is actually favorable for the stock market,” Goldman Sachs stated. The firm analyzed six possible trading scenarios that could occur after the non-farm report is released on Friday. Here are the potential outcomes:
If non-farm payrolls exceed 275,000, the S&amp;P 500 could drop at least 1%;
If non-farm payrolls are between 235,000 and 275,000, it could lead to a decline of 0.5% to 1% in the S&amp;P 500;
If non-farm payrolls are between 200,000 and 235,000, it could result in the S&amp;P 500 moving up or down by 0.5%;
If non-farm payrolls are between 150,000 and 200,000, it could lead to an increase of 0.5% to 1% in the S&amp;P 500;
If non-farm payrolls are between 100,000 and 150,000, the S&amp;P 500 could fluctuate between 0% and 1% up;
If non-farm payrolls are below 100,000, it could lead to the S&amp;P 500 fluctuating between 0% and down 0.5%.
However, Flood's official stance assumes an increase of 235,000 non-farm jobs, a figure that suggests U.S. stocks may face selling pressure on Friday.
Origin: Jin Shi Data

On non-farm payroll night, the market probably least wants to see this number

- Goldman Sachs anticipates that Friday's non-farm payroll report will significantly influence market direction, with investors preparing for various outcomes.  
- The report, being the last major economic data of the year, could impact the Federal Reserve's decision on interest rates during its December 17-18 meeting, with a 75% market expectation for a 25 basis point cut.  
- Six potential trading scenarios for the S&P 500 index are outlined, with significant market reactions expected based on the reported job growth figures.

What is the non-farm payroll surprise? Beware of this number!