Jobs report could get Fed to pull the trigger

Whether the Federal Reserve pulls the trigger on an interest rate hike next month at its final meeting of the year could hinge on how many jobs the U.S. economy created in October.

That's why Wall Street is closely eyeing the government's October employment report set for release at 8:30 a.m. ET Friday.

"Traders are exercising caution ahead of Friday's key non-farm payrolls report, which could have December rate-hike implications," Andrea Kramer, analyst at Schaeffer's Investment Research, told clients in a report.

On Wednesday, or course, Fed chair Janet Yellen told a House committee that a December rate hike remains on the table if employment and economic data continue to firm.

Wall Street economists are forecasting job growth of 183,000 and the unemployment rate to tick down to 5% from 5.1%.

Job growth has slowed considerably the prior two months, with only 142,000 new jobs created in September and August job growth revised down to 136,000.

Prior to those months, new jobs came in north of 200,000 on a regular basis.

The general consensus on Wall Street is that a solid jobs beat is necessary to keep the Fed's rate hike plans for later this year on track. "A third sub-200,000 reading is unlikely to reinforce optimism for an end of the year rate increase," noted Lindsey Piegza, chief economist at Stifel.

How stocks react to the jobs number could hint at investors' comfort level with a rate hike.

Adam Shell on Twitter: @adamshell.