Wall Street is anxiously awaiting the April jobs report, due this Friday, May 3. Will the stock market crash?

Well, maybe. Stocks have been down since the start of the second quarter, perhaps for good reason.

Inflation has taken a surprising upwards turn, with both the Consumer Price Index (CPI) and Personal Consumption Expenditure (PCE) reports coming out hotter than projected. Q1 gross domestic product (GDP) had a similar story, showing that economic growth decelerated to less than half the level recorded in Q4 of last year, also notably worse than forecasts.

Some have even tossed around the taboo notion of stagflation taking root in the economy. Stagflation is an economic cycle defined by high unemployment, high inflation, and low economic growth.

With inflation and economic growth heading in the wrong direction recently, this week’s jobs report may well be the final piece of the puzzle.

Wall Street has also been abuzz with speculation that the Federal Reserve’s restrictive interest rates are finally weighing down on the economy. It will likely confirm the theory if the jobs report also shows signs of contraction.

Stock Market Crash Fears Fly Ahead of April Jobs Report

Despite the noise, economists remain hopeful for the labor market. Indeed, consensus forecasts show that the U.S. economy is expected to add 250,000 jobs in April. While this is less than March’s 303,000 new payrolls and below the 3-month average of 276,000 job gains, it would keep the unemployment rate at 3.8%, unchanged from March, and still be considered historically strong.

Should the forecast prove accurate, it would also give economists (and, more importantly, the Federal Reserve) some hope that the economy isn’t quite deteriorating at the pace other recent data might suggest.

This has mixed implications for Wall Street. Should jobs hold strong, it would likely give the central bank ever greater leeway to hold off cutting rates in an effort to snuff out inflation, something Wall Street dreads.

According to the CME FedWatch Tool, the Fed’s chances of cutting rates at the May policy meeting are just 2.7%, 11.5% in June, and 30% in July. These numbers have fallen substantially since the start of the year.

On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.