Why the jobs report could shut down the stock market, according to a major Wall Street bear

Why the jobs report could shut down the stock market, according to a major Wall Street bear

The July jobs report was so unexpected on Friday, coming in at more than double expectations, that it may prompt the Federal Reserve to be much more aggressive in raising interest rates than market watchers thought alone a day before

If so, would that set the table for a possible quick move lower in the stock?

“I think it does it at the S&P level for the index,” Wall Street’s top bearish strategist Mike Wilson of Morgan Stanley told Yahoo Finance (video above) when asked if the employment report is a type of news selling event.

Wilson added that the overall conditions, ranging from slowing corporate profit growth to rising rates to strong inflation, are in place for the S&P 500 to clear June lows in the fall.

This projected move would see the S&P 500 lose at least 8% from current levels.

Wilson continues to steer clients into more defensive areas of the market and is not opposed to holding more cash than normal. If the sell-off happens, according to Wilson, we could witness the start of a new bull market in 2023.

In any case, investors will have to put up with trying to figure out otherwise confusing economic data and what it means for Fed policy.

The US economy added 528,000 jobs in July, the Bureau of Labor Statistics reported today, amid expectations for 250,000 jobs added. This stunning job gain completes a milestone for the US economy as pre-pandemic employment has been fully restored.

Employment gains were broad and accompanied an increase of 96,000 jobs in leisure and hospitality, underscoring strong demand for travel, Marriott CEO Anthony Capuano said. on Yahoo Finance Live this week. In addition, average hourly earnings rose a solid 5.2%.

“I personally don’t think it is,” US Labor Secretary Mary Walsh told Yahoo Finance Live about whether the economy is currently in recession.

A polar bear near Hudson Bay, Churchill area, Manitoba, northern Canada (Photo by: Dennis Fast/VWPics/Universal Images Group via Getty Images)

Morgan Stanley’s Wilson offered one final warning to the bulls that emerged in July: Bear markets don’t end kindly.

The story continues

“The last part of these bear markets tends to be the most vicious because you finally get that capitulation, which we really haven’t seen yet,” Wilson added.

Brian Sozzi is managing editor and anchor of Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi yen LinkedIn.

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About the Author: Chaz Cutler

My name is Chasity. I love to follow the stock market and financial news!