(Bloomberg) — Stock markets are likely to trade sideways until US employment data show clear signs of either weakening or strengthening, according to Bank of America Corp. strategists.

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The team led by Michael Hartnett said there’s several market factors at play to support both bullish and bearish narratives. While the optimists say technology and semiconductor stocks — including this year’s leader Nvidia Corp. (NVDA) — have bounced off key technical levels, the pessimists warn that “nothing good happens” when bond yields and banking stocks decline at the same time.

A clear direction for jobs would “resolve the autumn ambiguity,” Hartnett wrote in a note, after non-farm payrolls climbed by 142,000 in August, lower than economists’ expectations. “Until then, risk rotates rather than rips or retreats.”

US stocks have whipsawed since mid-July as weak employment figures raised worries of a recession. That has also left investors guessing about the extent of possible interest-rate cuts from the Federal Reserve in the coming months.

Traders are now pricing in more than 100 basis points of reductions by the end of 2024, beginning with a quarter-point cut next week, according to swaps data.

After remaining bearish on stocks as the S&P 500 rallied last year, Hartnett has stated his preference for bonds in 2024.

The next jobs print from the Labor Department is due on Oct. 4. For now, Hartnett said he remained bullish on bonds and gold. For equity investors, he recommended a barbell of resources stocks and bond-sensitive sectors such as real estate investment trusts.

—With assistance from Michael Msika.

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