A Walmart location in Burbank, California. Patrick T. Fallon | Bloomberg | Getty Images

October's nonfarm payrolls report Friday could bring some good news for the jobs market, which might be bad news for the stock market. The Labor Department's count always gets a close watch on Wall Street for the pace of company hirings and the unemployment rate, which currently sits at its lowest level since 1969. However, the market may look past those two numbers and into a data point that has gotten an increasing amount of interest over the past several months. Average hourly earnings have been threatening to break over the 3 percent barrier for the past several months, touching a year-over-year post-recession high of 2.9 percent in August. Economists expect that October will mark a break in the psychologically important barrier. A survey by Refinitiv puts the likely gain at 3.1 percent. If that is correct, that would mark the highest wage gains since April 2009, just a few months before the Great Recession ended.

That would also signify a victory of sorts for an economy that has seen a boom in employment but only muted gains in worker paychecks until recently. But it also would indicate that wage pressures are building, which could spill over into broader inflation fears, something that has been keeping investors on edge. "This is a no-win jobs report for investors," said Michael Arone, chief investment strategist for U.S. SPDR business at State Street Global Advisors. "One one hand, if you get a number that beats expectations and you're showing an acceleration in wages, markets are going to be concerned that the Fed is going to continue to raise rates and perhaps raise them more aggressively. "On the other hand, if you get a number that disappoints and signals a kind of slowdown in the labor markets, you're going to get that to feed into this slower growth theme."

Fed feeds inflation fears

The recent market slump began right around the time Federal Reserve Chairman Jerome Powell made comments about the future path of monetary policy that indicated the central bank would be hiking rates more than anticipated. Powell has said he is concerned about financial imbalances as well as the Fed getting behind the curve when it comes to inflation. An inflation scare earlier this year also spurred a market correction. "There are fears from investors that the Fed will make a policy mistake by tightening too aggressively and prematurely ending the economic expansion," Arone said. As for the 3 percent level itself, some in the market often focus on such round numbers that end up not meaning that much. After all, the pace of wage gains still is only modestly ahead of the inflation rate, meaning that workers still are seeing only incremental gains. "I find it hard to believe that anything in that report is going to be very useful to get any strong sense in how things [in the market] behave over the next few months," said Joseph LaVorgna, chief economist for the Americas at Natixis. "The only useful part of this report is the direction of the unemployment rate. It's still going down." Economists expect the headline jobless rate to hold at 3.7 percent, a nearly 50-year low. Total nonfarm payroll growth is projected at 190,000, after September's disappointing 134,000. The jobs report often moves the market. Positive surprises over the past two years have generated an average gain of 0.38 percent on reporting day, with the market higher 82 percent of the time, according to Bespoke Investment Group. The market has been about flat on average for days when the payrolls number came in below estimates, with gains happening 62 percent of the time. A reading for hourly earnings above 3 percent "could create additional market anxiety about building inflationary pressures," Lewis Alexander, chief U.S. economist at Nomura, said in a note. "However, we do not expect increases in wage growth to translate directly into inflation."

Good for workers