Illustration: Aïda Amer/Axios

Investors will be closely watching today's U.S. nonfarm payroll report, but they will also have 1 eye out for news on a potentially pivotal meeting between U.S. and Chinese negotiators next week.

What's happening: President Trump downplayed the importance of the meeting on Thursday, telling reporters he has "a lot of options on China. But if they don’t do what we want, we have tremendous power."

  • It's becoming clear the market doesn't see it that way.

Reality check: The U.S. economy continues to grow, but is increasingly struggling to do so. By the day, more economic indicators — from manufacturing to consumer and business sentiment and now the all-important services sector — are turning negative with more industries beginning to follow manufacturing, trade and transportation into outright contractions.

  • The trade talks are "the main concern" Bernard Baumohl, chief global economist at The Economic Outlook Group, has about the stock market.
  • "If once again nothing gets accomplished we could see another substantial fall," he tells Axios.

Where it stands: U.S. equities rebounded on Thursday, as traders continued to buy the dip despite data showing growth in the U.S. services sector badly missed expectations.

  • Investors increased bets that the Fed would step in next month with rate cuts to help stabilize the economy.
  • However, many are losing faith in the power of monetary policy to help steady the ship, especially in light of the continued struggles in the eurozone and Japan, which have instituted negative interest rates and considerable stimulus.

"Monetary policy is not going to do a damn thing," Baumohl says. "Monetary policy is being held hostage to this trade conflict."

But, but, but: There may be nothing Trump can do to get a meaningful deal with China at this point, as Beijing seems to be participating in negotiations "with the primary intention of staving off further tariff hikes,” Eleanor Olcott, China policy analyst at independent consultancy TS Lombard, told the South China Morning Post.

  • “Trump’s actions throughout the trade war, escalating tensions in a wildly unpredictable manner, has made the U.S. an unreliable negotiating partner in the eyes of the Chinese political elite. This, in turn, has relieved pressure on Xi to strike a deal because he is able to convincingly lay the blame for derailment on the U.S."
  • “The impeachment proceedings tie Trump’s hands when it comes to his domestic agenda, so his attention will be focused on his foreign policy stance, meaning we are likely entering a period of more volatile trade war news.”

Go deeper: U.S. and China agree to restart trade talks in D.C.

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