Macro news has become important again, rising to the average 2013 level and set to increase as poor domestic economic data and concerns about weak emerging markets push stock prices down. With a disappointing ISM manufacturing survey released on Monday, investors will be looking to the coming jobs report to steady the market.

Macro trends: Stock correlations back to 2013 average

“Just when investors wanted to focus on micro data points, market activity swiveled decisively in the direction of macro news flow,” writes Goldman Sachs analyst David J. Kostin. “While 50% of the firms in the S&P 500 (INDEXSP:.INX) have released 4Q results during the past few weeks, company specific news has been overshadowed by developments in emerging economies and markets which in turn affected developed equity markets.”

Stock correlations are still below recent peaks, but the floor appears to be rising. The bond rally that pushed treasury yields down from 3.0% to 2.7% was completely unexpected, and while the ISM manufacturing survey was expected to fall a bit, consensus put it at 56.1 in January, down from 56.5 in December, almost no one saw the PMI going as low as 51.3.

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“Investor infatuation with macro news is understandable given the surprises YTD,” Kostin writes. The US MAP score, which is how Goldman measures economic surprises, has flipped from +25 to -24 since the beginning of the year.

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The consensus expectation for Friday is that the economy will have generated 174,000 new jobs keeping the unemployment rate roughly stable at 6.7%, but after so many jolts, investors must be feeling unconfident in macro risks right now.

EM impact on DM has been significant: Goldman

“The recent EM impact on developed markets has been significant,” writes Kostin. “Dramatic dislocations occurred in currency, interest rate, and stock markets. The MSCI Emerging Market equity index is down 10% YTD and 13% since its October high.”

If the jobs report is just as bad, it could be enough to give Fed chairperson Janet Yellen second thoughts about continuing to taper QE, but if she proceeds on schedule the risk of EM contagion is starting to worry people. Kostin advises managers not to get so caught up in macro risk that they forget micro factors, but another disappointment and people may have to reassess the strength of the US recovery.