The stock market’s eerie quiet could end abruptly Friday in a noisy bout of market volatility if the August jobs report comes in strong and puts the Federal Reserve on track for its first interest rate hike of the year when it meets in September, USA Today reports.
The U.S. central bank hasn’t increased rates since December, when it moved rates off zero for the first time in nearly a decade. Federal Reserve Chairman Janet Yellen has said the case for a rate hike has strengthened.
The broad Standard & Poor’s 500 stock index, which is still hovering near all-time highs, has gone 38 days without a move of more than 1%, its longest such streak of low volatility since July 2014, according to Bespoke Investment Group.
Wall Street sees the economy generating 180,000 new jobs in August. If the government reports a blockbuster number—a job count north of 250,000 or closer to 300,000—a growing number of investors believe that could clear the way for a rate hike.
Still, not everyone is ready for such a move.
“We might get a wobble in risk markets if the numbers are good,” says Luke Bartholomew, a money manager at Aberdeen Asset Management. “The recent period of low volatility looks unsustainable, and the combination of a strong payrolls report and the strong possibility of a September hike is exactly the kind of thing that could break the market out of its current groove and cause a meaningful pickup in volatility.”
