What to watch

Numbers in May jobs report key to Fed move

When the U.S. releases its May jobs report Friday, the market isn’t likely to react in a big way unless the number of jobs created last month comes in way under the 180,000 forecast by analysts.

U.S. employers, who added 211,000 jobs in April after a weak March, are seen adding 180,000 jobs in May, according to economists polled by Bloomberg. The unemployment rate, now at its lowest level in 16 years, is expected to remain unchanged at 4.4%.

The May jobs report is one of the last pieces of data before the Federal Reserve’s June 13-14 meeting on interest rates. Investors are placing 96% odds on the Fed hiking its key rate a quarter- point to a range of 1% to 1.25%. A June hike would be the second in 2017 and third since December.

It would take a very weak jobs number to keep the Fed from hiking rates, says Sameer Samana, global quantitative and technical strategist at Wells Fargo Investment Institute. And it would take a super-strong jobs report to spark fears of the Fed raising rates more than currently expected. The Fed is seen hiking rates three times total in 2017.

“Unless the number of new jobs comes in below 100,000 or above 300,000,” its impact will be minimal, Samana says.

Another data point to watch is average hourly wages. If wages keep ticking higher it could crimp corporate profits and boost inflation — and perhaps raise fears the Fed will hike rates more than expected. “Higher pay is an input cost for business,” Samana says.