Traders price in muted S&P 500 reaction to Friday's jobs data on options markets

Traders in the options market are betting that the S&P 500 will barely move after the upcoming US jobs report drops on Friday, following a stretch of stronger-than-expected economic numbers and a slowdown in tariff aggression from President Donald Trump.

The projected move is just 0.9% in either direction, based on options pricing from Piper Sandler & Co. That’s the tightest range ahead of a jobs print since February. Over the past year, the average actual move after a jobs report has been 1.3%, making this week’s estimate a major outlier.

Investors were panicking earlier in April when Trump launched a new set of tariffs targeting global trade partners, which sent the S&P 500 tumbling toward bear territory. But in the past few weeks, Trump has either paused or scaled back most of those levies.

The change in tone, combined with steady inflation figures and strong job opening data, pushed the index up close to its highs. It now sits only 2.8% below its all-time peak from earlier this year.

Funds cut volatility bets as S&P 500 gains in May

Following a sharp 6.2% rally in May — the best May performance since 1990 — large players like hedge funds and institutional traders have started betting against volatility. For the first time in five weeks, futures tied to the Cboe Volatility Index are showing a net short position, according to the Commodity Futures Trading Commission.

Helping to boost that confidence are recent surprises in the data. The Citigroup US Economic Surprise Index, which tracks whether new figures are above or below Wall Street expectations, flipped positive in late May.

That hadn’t happened since February, the same month the S&P 500 last broke records. Meanwhile, the Atlanta Fed’s GDPNow model now projects second-quarter GDP growth at an annual rate of 4.6%, reversing a 0.2% contraction in Q1.

But not everyone’s relaxed. Andrew Tyler, who heads the trading desk at JPMorgan Chase, warned that if job growth falls below 100,000, the S&P 500 could drop up to 3%. He estimates only a 5% chance of that happening.

In his team’s base case, where job gains fall between 115,000 and 135,000, the index could rise between 0.25% and 1%. Bloomberg’s economist poll is landing right in that range, with an expected 130,000 jobs added in May, down from 177,000 in April. The unemployment rate is expected to hold steady at 4.2%.

Barclays lifts price target on S&P 500 to 6,050

Meanwhile, on Wednesday, Barclays raised its year-end forecast for the S&P 500 from 5,900 to 6,050, pointing to reduced trade tensions and improving corporate expectations for 2026. 

This follows similar target increases by Goldman Sachs and UBS Global Wealth Management in May, and by RBC Capital Markets and Deutsche Bank this week. Barclays also dropped a new 2026 projection, setting a year-end index target of 6,700 with earnings per share forecast at $285.

With the S&P 500 closing at 5,970.37, Barclays’ new target reflects an upside of about 1.32%.

Last month’s rally helped the index recover from a rough April that was weighed down by trade war fears and recession chatter. As Trump softened his stance and inflation came in cooler than feared, stocks caught a tailwind. Corporate earnings didn’t disappoint either, further supporting the rebound.

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