What Wall Street Players Expect from Tomorrow’s NFP Report and How it Will Impact the Markets

Investors are eagerly awaiting the monthly US employment report (Non-Farm Payrolls), set to be released on Friday, which has the potential to set the tone for the markets throughout September. This report will be crucial in assessing whether the Federal Reserve will cut interest rates as early as October or delay such actions until later.

The S&P 500 recently surpassed the 6,500-point mark, supported by growing hopes for monetary easing. That’s why the markets are looking for the “goldilocks” scenario — data that show a slowdown in the labor market, but not so weak as to trigger fears of a severe economic downturn.

What Are Economists Expecting?

Goldman Sachs is forecasting a weaker-than-usual jobs report, projecting an increase of just +60,000 new jobs, as, according to the bank, the risks are skewed to the downside due to seasonal softness in August data. The bank expects the unemployment rate to rise to 4.3%, which would reinforce the narrative of a labor market losing momentum. As for wages, Goldman anticipates a +0.3% month-over-month increase, in line with broader market consensus.

The bank believes that such a report would support the case for the Fed to begin cutting interest rates as early as September, though the final timing will also depend on other upcoming economic indicators.

What Is the “Ideal Number” According to Wall Street?

Adam Crisafulli from Vital Knowledge suggests that the most favorable range for job growth would be between 70,000 and 95,000 new jobs. Numbers within this range would be “soft” enough to justify a rate cut, but not so weak as to trigger panic over a potential recession.

Economists at Dow Jones are also forecasting around 75,000 new jobs, slightly above the disappointing 73,000 reported in July. Any figure below this range would heighten fears of economic weakness, while unexpectedly strong data could backfire for markets by reducing the likelihood of a rate cut this fall.

Diverging Risks: Downside and Upside

Luke Tilley, Chief Economist at Wilmington Trust, warns that there is a real risk of a negative payroll figure for August. He expects a continued slowdown in labor market activity, noting that many companies are refraining from both hiring and firing — a signal of market uncertainty. According to him, the risk of a recession within the next 12 months is around 50%, and his stance on the equity markets remains neutral.

On the opposite end, Jeff Kilburg from KKM Financial warns of a positive surprise — a stronger-than-expected jobs report or upward revisions to previous data. In such a scenario, the market may reassess the likelihood of interest rate cuts, potentially delaying or even cancelling them in October or December.

What Does This Mean for the Markets?

• Gold and Silver:
  Weaker data and a rise in unemployment would increase expectations for interest rate cuts, which typically benefits precious metals. Expectations for lower bond yields and a weaker dollar could push gold to new all-time highs, especially if economic risks intensify.
• US Dollar:
  A soft NFP report and higher unemployment are likely to put downward pressure on the dollar, as they would reinforce expectations for faster Fed easing. This scenario may support currencies like the euro and British pound.
• Equity Indexes:
  Data within the “goldilocks zone” (70,000–95,000) could boost stocks, as it would strengthen hopes for lower rates without triggering recession fears. However, surprises outside of this range — whether too weak or too strong — could lead to volatility and pullbacks, particularly in the tech sector, which is most sensitive to rate expectations.