The coming week will give investors a fresh look at the health of the US economy with the release of a closely watched employment report that could help determine the course of interest rates in the coming months.

Stocks head into December with the benchmark S&P 500 near record highs after rising more than 25% year-to-date. Part of that performance has been driven by expectations that the Federal Reserve will continue to cut interest rates into next year after cutting borrowing costs by 75 basis points in 2024.

But uncertainty over the Fed’s rate path has risen in recent months as a wave of robust economic data – including a blowout jobs report for September – raised concerns that inflation could rise if the central bank cuts rates too far, undoing two years of progress to tame down prices.

While investors have largely welcomed evidence of economic strength, another round of strong jobs data on Dec. 6 could further erode expectations of Fed cuts and create caution about inflation, investors said.

The jobs data “is going to give a clearer picture of the underlying trend, which is important as there is a lot of debate and uncertainty around the Fed’s rate path,” said Angelo Kourkafas, senior investment strategist at Edward Jones.

Wall Street has already tempered expectations for cuts in the coming year. Fed funds futures show investors are betting the rate will fall to 3.8% by the end of next year, from its current 4.5% to 4.75%. That is more than 100 points higher than what they had priced in September.

Fed Chairman Jerome Powell said earlier this month that the central bank does not need to rush to cut interest rates, citing a solid labor market and inflation that remains above its 2% target.

The Fed is “starting to question how much more easing the economy, especially the labor market, really needs,” said Sameer Samana, senior global market strategist at the Wells Fargo Investment Institute.

Futures late on Wednesday priced a probability of around 70% that the central bank will cut interest rates by 25 basis points at its meeting on 17-18. December, according to CME Fedwatch.

Economists polled by Reuters expected payrolls to have risen by 183,000 jobs in November, and a report that far exceeded those forecasts could shake confidence in a move in December and hurt stocks, said Anthony Saglimbene, chief market strategist at Ameriprise Financial.

“There could be a little bit of a sell-off here if you see the jobs report coming in stronger than expected,” he said.

Stocks have been boosted by the view that President-elect Donald Trump’s policies such as tax cuts and deregulation can spur growth despite their inflationary potential.

Stocks in recent days have largely shrugged off Trump’s promise to impose hefty tariffs on Canada, Mexico and China, the US’s three biggest trading partners. More optimism was reflected in the Conference Board’s survey released Tuesday, which found that 56.4% of consumers expect stock prices to rise over the next year.

Meanwhile, the S&P 500 is trading at more than 22 times earnings estimates for the next 12 months, its highest P/E value in more than three years, according to LSEG Datastream.

For strategists at Yardeni Research, the rising optimism can be a worrying signal.

“A more immediate risk to the stock market rally than tariffs is investors getting too bullish,” Yardeni Research said in a note Thursday. “From a contrarian perspective, this suggests a pullback is likely.”

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