Key facts
- JPMorgan's US Market Intelligence framework analyzes the May nonfarm payrolls report.
- The report is considered important but not dominant due to geopolitical and macro risks.
- A 'goldilocks' scenario of 75k job gains is the highest probability outcome.
- This scenario is expected to support a modest market grind higher.
- Other scenarios include a stronger or weaker print, with varying market impacts.
JPMorgan's US Market Intelligence desk views the upcoming nonfarm payrolls report as significant but not the sole market driver, with Middle East uncertainty and broader macro risks competing for attention. Their economics team forecasts a 75k rise in May nonfarm payrolls, below the Street's 85k consensus and the prior month's 115k. The unemployment rate is expected to hold at 4.3%, with average hourly earnings rising 0.3% month-over-month and 3.4% year-over-year. The highest probability scenario (40%) is a 70k-100k payroll print, which the desk believes would be 'goldilocks' for equities, potentially leading to a 0.50% to 1.0% gain in the S&P 500 by avoiding inflation fears while not signaling a hard landing. A second-best outcome (25% probability) of 100k-130k payrolls could see the S&P 500 range from down 0.25% to up 0.75%, contingent on stable unemployment and wage growth, though higher yields could cap upside. A very strong print above 130k (5% probability) could lead to a 1.0% loss to a 0.50% gain in the S&P 500, particularly pressuring growth and high-momentum names if rates rise. A weaker print of 40k-70k (25% probability) could see the S&P 500 trade from down 0.75% to flat, reviving stagflation or consumer spending concerns. A print below 40k (5% probability) is seen as clearly negative, potentially causing the S&P 500 to lose 1.0% to 1.5% and raising hard-landing or stagflationary concerns. Options expiring June 5 priced roughly a 1.0% move, reflecting the market's view that the report is important but not the only driver. Seasonality and revision risks are also noted as factors for caution regarding May payrolls.