Wall Street is going to need another “goldilocks” number out of next week’s jobs report, as investors grow wary of a pullback. The September nonfarm payrolls report, which comes out Friday, is expected to have a bigger impact than usual for the market, as it will determine the path of monetary policy for an unusually polarized Federal Reserve. Markets were last pricing in two interest rate cuts for the remainder of 2025, the same as what the central bank itself projected at its last meeting . Stocks went higher on the back of the Fed’s prediction. But that outlook is at the mercy of upcoming reports, and what’s readily apparent to investors is that Friday’s jobs data is going to have to hit the sweet spot for a data-dependent Fed. Not too hot as to turn policymakers hawkish. Not too cold as to indicate a major slowdown. “If you saw jobs actually look pretty strong, I think the market might say, ‘Oh no, where are my rate cuts?'” said Marta Norton, chief investment strategist at Empower Investments. “And then if you saw jobs collapse, you would say, ‘Oh no, recession.'” “I think jobs feels like the pendulum factor when we think about monetary policy,” Norton continued. A new normal What the September jobs data is likely to show is a new normal. Gone are the days when the headline number consistently printed between 150,000 to 200,000. Instead, in recent months, the nonfarm payrolls reports have cemented that the U.S. labor market is in a downtrend. In August, just 22,000 government and private sector jobs were added. In July, the headline number came in at 73,000 , with steep revisions downward for prior months. The June data was revised lower to a loss of 13,000 jobs, the first negative print since the height of the coronavirus pandemic. Economists expect Friday’s report will show more of the same, with a headline number of just 59,000, and an unemployment rate remaining steady at 4.3%, according to consensus estimates from FactSet. They also expect that a negative print, potentially the second one this year, isn’t out of the question. Markets may be able to take a weaker headline number in stride so long as it stays within the breakeven pace of jobs growth, meaning it does not vacillate so much as to change the unemployment rate. Gregory Daco, chief economist at EY-Parthenon, said that the number could be between zero and 50,000, an estimation he considers reasonable given the impact President Donald Trump’s immigration crackdowns have had on labor supply. Yet, he underscored the risk of next week’s jobs report to monetary policy. A strong number — which he emphasized is greater than 50,000, not more than 150,000 — could hurt the interest rate outlook. “I think what we saw in the dot plot was increased polarization of Fed policymakers,” Daco said. “And we will see how the report turns out, but the payroll report is going to have this outsized importance in determining whether data-dependent policy makers will want, or will favor, the back to back rate cut in October.” October seasonals Wall Street is also barreling toward the start of a new month. September is on pace to close out with solid gains, with the Nasdaq Composite rallying more than 4% this month. The Dow Jones Industrial Average is higher by more than 1%. The S & P 500 rose more than 2%. On Friday, however, the major averages were headed for a losing week , following stumbles in the tech trade that cast down on the market’s recent advance. Concerns of a government shutdown also loom, with House Minority Leader Hakeem Jeffries on Thursday warning Democrats will not be “intimidated” by the Trump administration’s warning to federal agencies to prepare for mass firings. If a shutdown occurs, that could cause a number of knock-on effects, including delayed economic data. Even without this possibility, October could bring with it further volatility . The worst six months of the year ends in October, according to the Stock Trader’s Almanac. It’s also the month that historically has had a number of major crashes, such as in 1987, 1997 and 2008. What’s more, the market itself is trading at valuations that are making many investors wary. The S & P 500 is trading at a 12-month forward multiple above 22, suggesting the broad market index is vulnerable to a near-term pullback. “The market could easily grind higher. You don’t have to try to time the market. But it’s not a bad idea to say, ‘Hey, these positions in my portfolio have gone nowhere. These other guys can’t stop running. I’m just gonna just take a little bit and rebalance,'” Empower’s Norton said. “I think that can be a really prudent strategy in a market like this one that has some momentum to it, but also carries some really high valuations,” she added. Week ahead calendar All times ET. Monday, Sept. 29 10:00 a.m. Pending Home Sales Index (August) 10:00 a.m. Pending Home Sales (August) 10:30 a.m. Dallas Fed Index (September) Earnings: Carnival Tuesday, Sept. 30 9:00 a.m. FHFA Home Price Index (July) 9:00 a.m. S & P/Case-Shiller comp.20 HPI (July) 9:45 a.m. Chicago PMI (September) 10:00 a.m. Consumer Confidence (September) 10:00 a.m. JOLTS Job Openings (August) Earnings: Lamb Weston Holdings , Paychex , Nike Wednesday, Oct. 1 8:15 a.m. ADP Employment Survey (September) 9:45 a.m. S & P Global PMI Manufacturing final (September) 10:00 a.m. Construction Spending (August) 10:00 a.m. ISM Manufacturing (September) Earnings: Conagra Brands Thursday, Oct. 2 8:30 a.m. Continuing Jobless Claims (9/20) 8:30 a.m. Initial Claims (09/27) 10:00 a.m. Durable Orders ex-Transportation (August) 10:00 a.m. Durable Orders (August) 10:00 a.m. Factory Orders (August) Friday, Oct. 3 8:30 a.m. Hourly Earnings preliminary (September) 8:30 a.m. Average Workweek preliminary (September) 8:30 a.m. Manufacturing Payrolls (September) 8:30 a.m. Nonfarm Payrolls (September) 8:30 a.m. Participation Rate (September) 8:30 a.m. Private Nonfarm Payrolls (September) 8:30 a.m. Unemployment Rate (September) 9:45 a.m. S & P Global PMI Composite final (September) 10:00 a.m. ISM Services PMI (September)
