Will a Weak Jobs Report Be a Tipping Point for a Stalling Market?
Reaction to the news could determine if bears may finally gain a foothold. But here's why poor employment numbers may not be all bad.
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The feud between President Trump and Elon Musk is dominating headlines on Friday morning, although Tesla TSLA has rebounded about 4.5% in early trading after dropping 14.2%, and Musk backed off on his threat to decommission SpaceX’s Dragon rocket that is scheduled for runs to the International Space Station.
The Republican Party is rallying around President Trump and pushing ahead with the "Big Beautiful Bill," which Musk is attacking for its high level of spending. The view of many is that while spending is still too high, it is politically necessary to ensure that the Trump tax cuts are passed.
The indexes are trading slightly higher as investors await the May jobs report at 8.30 a.m. ET. The response to this report will be particularly interesting as concerns about a slowing economy have been building. This is one of the first major economic reports that will reflect post-tariff activity.
There have been very loud and pessimistic predictions that economic fallout from tariffs would soon be felt, but so far, that has proven incorrect. There have been a few minor signs of weakness, but so far nothing dramatic. A weak jobs report could be a tipping point for the economic skeptics who believe something ugly is developing.
However, weak jobs news may not be all bad because it is likely to give the Fed cover to start cutting interest rates. The market has been anxious about rate cuts for a while, but Jerome Powell and his crew have been hesitant because of concerns that tariffs could increase inflationary pressures. Weaker job growth would likely help to offset those concerns. Trump has been attacking the Fed for being behind the curve as the European Union has been rolling out a number of precautionary rate cuts.
Technically, the indexes have been showing signs of rolling over as they stall at recent highs, but there has been good support and dip buying so far. The Trump-Musk drama on Thursday shook things up, but there is no follow-through so far. The reaction to the jobs news is going to determine if the bears may finally gain a foothold.
At the time of publication, Rev Shark had no positions in any securities mentioned.
