Non-Farm Payrolls Shift to Thursday, Market Braces for Impact

The U.S. non-farm payroll report, originally scheduled for Friday, will be released on Thursday due to the July 4 holiday. This shift has drawn considerable market attention, with analysts at a prominent financial institution conducting simulations to gauge potential market reactions.

According to the simulations, if the non-farm payroll data aligns with the weak trends observed in the recent ADP report, the U.S. stock market could experience a significant sell-off. The ADP report, which showed a decrease of 33,000 private-sector jobs in June, has raised concerns about the economy's momentum.

Economists widely anticipate that 110,000 new jobs were added in June. However, some analysts predict a figure closer to 125,000. The financial institution's base scenario projects job additions between 105,000 and 125,000, which could drive the S&P 500 index up by 0.5% to 1%.

The report emphasizes that as long as the non-farm data exceeds 100,000, the stock market will remain supported. However, data close to the lower end of the predicted range may struggle to significantly improve market sentiment, especially considering the Federal Reserve Chair's warning that tariff impacts will be visible in the June and July data.

Prior to the non-farm data release, the S&P 500 index reached a new high for the year. The ADP report's weak performance has caused some traders and economists to question their forecasts, despite the ADP data not always accurately predicting the Bureau of Labor Statistics' employment figures.

The financial institution has outlined various scenarios and their potential market impacts. If job additions fall between 85,000 and 105,000, the S&P 500 index could decline by 0.25% to 1.5%. If the figure is below 85,000, the index could plummet by 2% to 3%. In the worst-case scenario, the market could face stagflation risks, where fiscal and monetary policies may be ineffective.

Conversely, if job additions range from 125,000 to 145,000, the S&P 500 index could rise by 0.75% to 1.25%. If the figure exceeds 145,000, the index's gains could expand to 1% to 1.5%.