JPMorgan Warns: June Jobs Report Could Spell Trouble for the Stock Market

July 3, 2025 — A softer-than-expected June jobs report is now flashing red flags for Wall Street, according to strategists at JPMorgan’s trading desk.

In a new client note, JPMorgan analysts said the labor market data released earlier this week introduces a “downside risk” to the U.S. stock market — suggesting that investor optimism may have run ahead of economic fundamentals.


What’s in the Jobs Report?

The Labor Department’s June report revealed:

  • Nonfarm payrolls increased by 155,000, well below consensus estimates of 205,000.
  • Unemployment rate ticked up to 4.2% — the highest since late 2021.
  • Wage growth slowed, with average hourly earnings rising just 0.1% month-over-month, missing forecasts.

These figures suggest a cooling labor market, fueling concerns that the economic slowdown is gaining momentum.


JPMorgan’s Take: Caution Ahead

JPMorgan’s trading desk believes this softness could lead to:

  • Profit-taking among investors who’ve driven recent gains in tech and cyclical stocks.
  • A potential reassessment of earnings expectations, especially if slower job growth bleeds into weaker consumer spending.
  • Heightened market volatility ahead of upcoming inflation data and Q2 earnings season.

“The softer labor data adds downside risk for equities, particularly if it’s followed by weak inflation or disappointing corporate guidance,” JPMorgan warned.


What About the Fed?

Ironically, a cooling labor market increases the likelihood of a Fed rate cut, possibly as early as September. But strategists say it’s a double-edged sword:

  • Rate cuts are typically bullish.
  • But the reason for cutting — slowing growth — could weigh heavily on risk assets.

“Markets may cheer the idea of a rate cut, but if job losses accelerate, it’s no longer about rates — it’s about recession,” JPMorgan noted.


What Should Investors Do?

Analysts advise a defensive tilt heading into Q3:

  • Favor high-quality large caps, especially in consumer staples and healthcare.
  • Be cautious with overbought tech and cyclical sectors like financials and industrials.
  • Watch closely for forward guidance in upcoming earnings reports — any signs of margin compression or demand softness could trigger pullbacks.

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