Tonight, the "bad news" of non-farm payrolls is the "good news" for the US stock market?

Wall Street is waiting for a potentially far-reaching US non-farm employment report, with some investors hoping that bad news on the economic front will good news for the stock market. Due to the fact that the US job market is currently in what some economists call a "low hiring, low firing" environment, expectations for January non-farm employment data are low: in addition to weak job growth, economists also expect Wednesday's report to be revised, which may indicate that the slowdown in hiring is more severe than previously thought. In recent months, the job market has been a focus for traders, even as the S&P 500 index continues to hit new highs. According to data from Goldman Sachs, last year investors reacted increasingly strongly to companies announcing layoffs, even if the layoffs were motivated by efficiency improvements or restructuring. In the past few weeks, companies such as Amazon, Home Depot, and Pinterest saw their stock prices drop after announcing layoffs. However, according to seasoned strategist Jim Paulsen, if historical experience is any guide, a deteriorating job situation may actually be beneficial for the overall stock market. This is because investors typically view weak employment data as a signal that the Federal Reserve will support the economy by lowering interest rates - something many on Wall Street expect to happen this year. Paulsen wrote, "Once policy stimulus is in place, regardless of whether the economy ultimately suffers a downturn, the stock market will turn its focus to economic recovery, and investors will start pushing stock prices higher." According to Paulsen's data, since 1948 (including today), during periods of economic expansion, when the seasonally adjusted annual non-farm employment growth rate has slowed to around 0.37% or lower, this has happened 14 times. Of those, 11 times turned out to be good times to buy stocks, with the S&P 500 index averaging an annual increase of about 13%, when the employment growth rate was between 0% and 1%. Paulsen noted that it is important to keep in mind that the S&P 500 index is currently hovering near historic highs, and many past slowdowns in the labor market occurred after the stock market sold off due to economic concerns. Brian Nick, head of portfolio strategy at Newedge Wealth, said, "If the US economy disappoints and companies can't maintain profit margins, problems may arise. This could lead to investors turning to safe havens, while companies may also lay off employees." Goldman Sachs' report shows that despite strong overall market performance, some cautious sentiments may already be emerging. According to the report released at the end of last year, companies that announced layoffs recently had stock prices on average 2% lower than predicted by the bank's technical models. Companies laying off staff for restructuring purposes fared even worse, with their stock prices dropping an average of 7%. Goldman Sachs economist Elsie Peng stated that these trends diverge from historical patterns. Bank data shows that in the past, layoffs motivated by efficiency improvements typically raised stock prices, while layoffs related to deteriorating fundamentals led to poor performance. Peng believes that this shift indicates that even if the reasons given by companies are more innocent, investors will interpret layoffs as a response to financial pressure. She wrote, "Despite seemingly harmless reasons given, the stock market has viewed recent layoff announcements as negative signals for these companies' prospects."