The June jobs report poses a risk to the stock market, according to JPMorgan’s trading desk.

JPMorgan’s trading desk has noted that if Thursday’s employment report mirrors a weak private payroll number from ADP, the US stock market might face significant selling. In a memo released Wednesday, the JPM US Market Intelligence team suggested that the market could rise if the employment figures are close to expectations, although there’s a notable downside risk. Economists are widely anticipating an increase of around 110,000 jobs, while Michael Ferroli, chief US economist at JPMorgan, expects about 125,000. The Trading Desk’s base case projects job growth between 105,000 and 125,000, predicting a 1% rise in the S&P 500 on Thursday. They emphasized that the stock market is still seeing demand. However, they caution that results at the lower end of this range may not lead to significant shifts in market sentiment, especially in light of Powell’s remarks regarding the effects of tariffs on data from June to August. While private payrolls don’t always predict the Bureau of Labor Statistics’ employment figures reliably, the trading desk anticipates that if the S&P 500 experiences a downturn, it could be down to 85,000 jobs. They also mentioned that the market may not provide substantial financial support, particularly in a worst-case scenario. The term “stagflation,” which describes periods of stagnant economic growth accompanied by high inflation, was also referenced, with predictions for a growth rate of 1.25%, up from the current 0.75%.