Investors brace for job-growth report

Ready for some more twisted Wall Street thinking? Good news for workers could be bad news for investors.

Investors are looking for solid job growth in the report due Friday. Non-farm payrolls are expected to show an increase of 225,000 jobs in July, a tad better than the 223,000 growth reported a month ago, says Bespoke Investment Group.

That's great news if you are looking for a job. It's not great news for investors. Why the disconnect? The better the job-growth picture looks, the more convinced investors are the Federal Reserve will get the guts to boost short-term interest rates. And while investors are happy to see economic growth, they also know fighting the Fed is often a losing battle.

Over the past two years, payroll numbers have beaten expectations about half the time, Bespoke says. On those days, stocks have gained 0.16% on average. But the market gains after better-than-expected jobs numbers eroded over time. Stocks fell 0.1% in early June after the better-than-expected jobs report. Stocks jumped 0.7% in early April and 1.4% in May when the jobs number came in worse than expected.