The July jobs report was so out-of-the-blue hot on Friday — coming in at more than double expectations — that it may spur the Federal Reserve to be way more aggressive on interest rate hikes than market goers thought just one day earlier.

If so, would that set the table for a potential swift downdraft in stocks?

"I think it does at the S&P level for the index," Wall Street's biggest bear strategist Mike Wilson of Morgan Stanley told Yahoo Finance (video above) when asked if on if the jobs report is a sell-the-news type of event.

Wilson added that the overall conditions — ranging from slowing corporate earnings growth to rising rates to bruising inflation — are in place for the S&P 500 to take out the June lows sometime by the fall.

Such a move predicted would see the S&P 500 lose at least 8% from current levels.

Wilson continues to guide clients into more defensive areas of the market and isn't opposed to holding more cash than normal. If the sell-off happens, according to Wilson, we could witness the start of a new bull market in 2023.

In any case, investors will have to endure trying to figure out otherwise confusing economic data and what it means to Fed policy.

The U.S. economy added 528,000 jobs in the month of July, the Bureau of Labor Statistics reported today, amid expectations of 250,000 jobs added. This staggering increase in jobs completes a milestone for the U.S. economy in that pre-pandemic employment is now fully restored.

Employment gains were broad-based and paced by a 96,000 increase in leisure and hospitality jobs —underscoring the strong demand for travel as revealed by Marriott CEO Anthony Capuano on Yahoo Finance Live this week. Furthermore, average hourly earnings rose a solid 5.2%.

"I personally don't think it is," U.S. Labor Secretary Mary Walsh told Yahoo Finance Live on whether the economy is currently in a recession.

Morgan Stanley's Wilson offered up one final warning to the bulls that emerged in July: Bear markets don't end kindly.

"The last part of these bear markets are usually kind of the most vicious because you finally get that capitulation, which we really haven't seen yet," Wilson added.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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