U.S. Jobs Report in Focus as S&P 500 Tests Record Highs

U.S. markets are entering a critical session as investors await the delayed January labor market report. Consensus expectations call for 65,000 new nonfarm payrolls after 50,000 in the previous month, with the unemployment rate holding steady at 4.4%.

However, hiring could surprise to the upside. We estimate payrolls may reach 110,000–130,000, largely driven by a one-off statistical effect as previously furloughed government workers return to official data. That dynamic could temporarily inflate the headline figure.

Notably, the White House has already signaled the possibility of weaker broader labor revisions for 2025, attempting to manage expectations ahead of the release. Once again, investors are recalibrating expectations.

Market Positioning Ahead of the Report

Futures on the S&P 500 and Nasdaq are showing consolidation, reflecting a neutral risk balance but elevated volatility potential. A report broadly in line with expectations would likely be the most constructive outcome for equities.

• Below 6900 on S&P 500 – could trigger a shift toward a more negative tactical outlook.
• Above 6990 – opens the door toward fresh record highs.
• Nasdaq above 25,000 remains critical for maintaining bullish structure.
• Resistance near 7,000 (SPX) and 25,500 (NQ) remains intact.

Previous session saw modest declines, though the S&P 500 continued to hold above the key 6900 zone, effectively stabilizing near all-time highs. Nasdaq pulled back from a local trendline but preserved structure above 25,000.

Macro Drivers: What Moves the Tape Today?

• January unemployment rate (consensus 4.4%)
• Nonfarm payrolls data
• Average hourly earnings
• U.S. 10-year Treasury auction

December retail sales came in weaker than expected, showing no growth and reinforcing concerns about consumer momentum. Following that release, U.S. Treasury yields declined toward 4.15%, approaching the lower boundary of a medium-term ascending channel.

Lower yields reflect rising expectations for eventual policy easing, though today's labor data could challenge that narrative.

Sector Performance Snapshot

Cyclical sectors showed mixed performance. Materials (XLB) and Real Estate (XLRE) led gains, while Retail (XRT) and Financials (XLF) underperformed.

Growth sectors leaned negative overall, with Cannabis ETF (MJ) and Biotech (IBB) among laggards. Cloud computing (SKYY) and Communication Services (XLC) managed gains.

Defensive sectors were largely stable. Utilities (XLU) closed higher, while Healthcare (XLV) saw moderate pressure.

Intermarket Signals

• Oil remains within a local rising channel, consolidating near 64.5.
• 10-year yield drifting toward 4.15% support.
• VIX balancing near 18 at the lower boundary of a short-term rising channel.
• Gold consolidating under 5,100 within a local uptrend.

The broader takeaway: markets remain structurally resilient but highly data-dependent. Clean break above resistance confirms momentum. Breakdown below 6900 shifts tone quickly.

Volatility is likely. Direction will depend on the quality of the labor data — not just the headline number, but wage growth and revisions.

Technical analysis by: Lucas Grant, Senior Technical Analyst at Finmire.