Pre-market futures pulled slightly into the red this morning upon the release of today’s all-important Employment Situation report, even though the numbers — while lower than expected on headline — continue to depict a labor market near full employment. The Dow swung from +20 points to -20 in the moments after the report came out, the S&P 500 went from 0 to -5 points, and the Nasdaq from -2 points to -40. The small-cap Russell 2000 moved from +1 ahead of the release to -6 points currently.

The quick-take on this reaction is that the market recognizes that a healthy labor market subtracts from the possibility a new interest rate cut is coming from the Fed, near-term. This also puts a bow on the Biden administration’s custodial duties over the past four years (barring possible revisions over the next couple months), which ushered in the Great Reopening and led to high inflation rates, where the fight continues today.

Non-Farm Payrolls Lighter than Expected for January, Still Healthy

Perhaps we won’t call +143K new jobs filled last month “robust” labor market growth, but today’s January headline on non-farm payrolls from the U.S. Bureau of Labor Statistics (BLS) still satisfies employment expansion above the margins of retiring Baby Boomers each month, which is estimated to be just beneath 100K or so. This is less than half the upwardly revised +307K headline for December.

That said, the Unemployment Rate came down to +4.0% for the first time since May of last year. Hourly Wages, a gauge for how labor affects inflation, rose unexpectedly by 20 basis points (bps) to +0.5% for the month, the highest rate in a year. Year-over-year, wage growth moved back up to +4.1% for the first time since March ’24; analysts had expected a 20 bps drop to +3.7% for the month.

There were no real surprises in job gains by sector: Healthcare, Retail and Social Assistance all led the way, as we have seen in recent months. Average Workweek Hours dipped to 34.1 hours, while Labor Force Participation ticked up slightly to +62.6%, where it hasn’t been since September. The U-6 (aka “real” unemployment) came in at +7.5%, in-line with expectations.

In all, the economy performs well when we carry these labor market figures in this manner, and over a longer period of time. The issue for the stock market is that it keeps near-term interest rates elevated at their current 4.25-4.50%; these BLS figures do not make investors hopeful for lower rates at the next Fed meeting in March. Thus, “having it all” remains elusive.

What to Expect from Friday's Stock Market

After today’s open, we’re not done with economic report releases. Wholesale Inventories for December are expected to have sunk further, from -0.2% the prior month to -0.5% in today’s print. Preliminary Consumer Sentiment for January is anticipated to come in at +71.3 versus 71.1 the previous month. Consumer Credit, again a December number, looks to swing to a positive +$14.0 billion from -$7.5 billion posted for the month prior.

Earnings reports continue their deluge next week, including household names like McDonald’s (MCD Quick QuoteMCD - Free Report) , Coca-Cola (KO Quick QuoteKO - Free Report) , Cisco Systems (CSCO Quick QuoteCSCO - Free Report) , Lowe’s (LOW Quick QuoteLOW - Free Report) , Shopify (SHOP Quick QuoteSHOP - Free Report) and Honda (HMC Quick QuoteHMC - Free Report) , to name but a few. By the end of next week, we’ll start to look at the end-game for Q4 earnings season, which generally brings us the big-box retailers in the following weeks.