Stocks Take Breather After Rally, Focused on Jobs

Published as of: January 7, 2026, 9:10 a.m. ET 

(Wednesday market open) The jobs data parade starts today, culminating in Friday's critical December nonfarm payrolls report expected to show another lackluster gain. Major indexes, some of which posted record highs yesterday, edged lower as geopolitical tensions simmered following weekend events in Venezuela and concerns about U.S. intentions in Greenland.

The ADP employment report for December released early today showed 41,000 private sector jobs created, below consensus of 45,000. The growth was completely in services--with goods-producing jobs down-- and Treasury yields dropped on the news. Estimates for nonfarm payrolls are near 55,000, with unemployment steady at 4.6% and wages up 0.3%. The numbers may matter more than usual after Federal Reserve Chairman Jerome Powell urged caution last month about cutting rates further. "The strength or weakness of the labor market should be the key driver of Fed policy going forward," said Collin Martin, head of fixed income research and strategy, Schwab Center for Financial Research (SCFR). "Weaker-than-expected labor market data would likely result in more Fed rate cuts than the one to two cuts we're projecting this year."

On Wall Street Tuesday, all major indexes turned green. The Dow Jones Industrial Average and the S&P 500 index marched to new all-time highs amid chip market enthusiasm, possibly sparked by news flow from a closely watched technology conference. Looking ahead, Friday might bring a tariff ruling from the Supreme Court, though that's not certain. "It's a decision that could have far-reaching implications for one of the president's key economic policies, global trade relations, and companies of all types," said Michael Townsend, managing director of legislative and regulatory affairs, Schwab.

1. More jobs data around corner: The November Job Openings and Labor Turnover Survey, or JOLTS, due soon after the open, is expected to show around 7.6 million jobs waiting to be filled, roughly even with October. That's in the same range as most of the last year between roughly 7 million and 7.8 million. As always, check the "quits" rate, which tracks how many people left their jobs. When quits rise, it can signal a fluid jobs market where new positions are ample. About 1.8% of people working quit in October, the last month of data. Sometimes, leaving a job isn't a choice. The Challenger report due early Thursday tracks layoffs. "We view the labor market as both a headwind and tailwind in 2026," said Kevin Gordon, head of macro research and strategy, SCFR. "Downward pressure is coming from tariffs, causing immense stress for small businesses. Those with 20-49 employees have created no payrolls over the past two years, and companies' cost-saving efforts are manifesting in virtually no hiring. At the same time, layoff activity remains incredibly low, which we expect to persist as long as large-cap fundamentals remain healthy, which continues to be the case."
    
2. Sectors in flux as rotation continues: From a sector perspective, the year begins with market breadth strongest in financials and materials, reflecting some of the recent rotation out of tech and communication services—the leading two sectors of 2025. Almost 90% of materials stocks trade at or above their 50-day moving averages, though to some extent that reflects recent strength in precious metals that appears fueled by speculative buying. The speculative trend could be a sign of rotation out of cryptocurrencies as some crypto "froth" moves into a new space. In general, it looks like traders hungry for volatility have made their transition over to metals, which could spark more volatility there. Another trend that may have legs is the rotation back into chip stocks late last week and early this week. That said, much of the recent outperformance has occurred in the industrials, materials, health care, and financial sectors as market breadth widens. These cyclicals have the greatest percentage of stocks above their 50-day moving averages, and are the sectors with the best relative strength, outperforming the traditional higher beta leaders such as communications, tech, and discretionary.
    
3. Seeking institutional buyers: Bitcoin (/BTC) showed signs of life to start 2026, reaching the highest level in more than three weeks. Futures open interest is edging higher and single-day exchange-traded product inflows hit a three-month high on Monday. Looking ahead, lower interest rates, rising central bank liquidity, and improving risk-on sentiment are among the factors that should support bitcoin this year, said my colleague Jim Ferraioli, director of digital currencies research and strategy at SCFR. But bitcoin's new status as a macro asset means it may struggle to attract new capital while other asset classes such as commodities and AI stocks are printing record highs. That was the case last quarter, when gold and silver soared to new highs as bitcoin and other cryptocurrencies sank. For now, bitcoin has merely moved from selloff to consolidation. Overall liquidity remains thin and signs of heavy buying are scarce. Any sustained rally would likely require buyers to jump back in on a much bigger scale.

Constellation Brands (STZ) rose 0.5% early today before earnings after the close. Last time out, Constellation reiterated lower full-year guidance. Investors likely will pay close attention to operating margin, which fell the prior quarter in part due to U.S. aluminum tariffs, CNBC reported at the time.

Chip stocks went on a tear Tuesday, continuing their recent sizzling pace. Micron (MU) posted a double-digit rally. Qualcomm (QCOM) also rose 3% as investors appeared enthused about its presentation at the CES tech conference where it unveiled a new chip and an expanded automotive collaboration with Google.

Another tech stock on the move Tuesday was Palantir (PLTR), which rose 3%. Strong performances also came from memory chips companies other than Micron, including Western Digital (WDC), Sandisk (SNDK), and Seagate Technology (STX), which joined Micron among double-digit gainers. Some of the buying in tech appeared to be a reversal of the rotation away from it that dominated much of the fourth quarter.
 

Shares of OneStream (OS), a financial software maker, rose more than 28% Tuesday on a Reuters report that buyout firm HG Capital has agreed to acquire the firm in an all-cash deal worth $6.4 billion.
 

Ford (F) climbed 2.4% yesterday after the automaker announced 6% U.S. vehicle sales growth in 2025, bringing its market share to 13.2%. The company enjoyed its best annual U.S. vehicle sales since 2019 last year, at 2.2 million. Strength in hybrid truck and the F-Series were highlights.
 

American International Group (AIG) fell 7.4% Tuesday on news its CEO will step down in June.
 

Microchip Technology (MCHP) rose nearly 12% Tuesday after the company raised its sales guidance for the recently ended quarter.
 

Crude oil (/CL) fell below $57 per barrel for front-month U.S. futures today after President Trump said Venezuela would supply $2 billion worth of crude. The global market is already considered oversupplied, analysts said. Shares of Valero Energy (VLO) and Chevron (CVX) both climbed 1% on ideas they could benefit from access to Venezuela's supplies.
 

Bitcoin (/BTC) fell early today from recent six-week highs. However, shares of crypto-related stock Strategy (MSTR) popped 4% ahead of the open. This came after finance firm MSCI decided to keep Strategy and other crypto firms in its major equity indexes.
 

Silver futures (/SI) slid more than 2% early Wednesday and gold also fell, putting pressure on mining stocks like Freeport McMoRan (FCX) and Newmont (NEM), both of which fell 2% ahead of the open. Copper futures (/HG) also slipped about 1% this morning but, like silver and gold, remain near record highs.
 

Mobileye Global (MBLY) popped more than 5% early after announcing it was buying humanoid robotics maker Mentee for $900 million.
 

Warner Bros. Discovery (WBD) fell 0.6% after the company rejected Paramount Skydance's (PSKY) amended hostile bid, Barron's reported. WBD is in a merger agreement with Netflix (NFLX).
 

Regeneron Pharmaceuticals (REGN) rose nearly 2% after getting upgraded to buy from underperform by Bank of America.

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As of yesterday, the S&P 500 index (SPX–candlesticks) was up 16.2% from a year ago versus only 11.79% for the S&P 500 Equal Weight Index (SPXEW–purple line). But if you back up to the week that ended November 17, it was a very different picture. At that time, the SPX was up 11.5% year over year versus almost no change for the SPXEW, which weighs all 500 stocks the same, rather than by market capitalization. The SPXEW hasn't caught up to the SPX yet, but its gains over the last six weeks might reflect rotation out of mega-caps and into a much broader array of cyclical sectors.

January 8: Challenger job cuts and expected earnings from RPM International (RPM).
 

January 9: December nonfarm payrolls, December unemployment, September and October housing starts and building permits, and January preliminary University of Michigan consumer sentiment.
 

January 12: No major data or earnings expected.
 

January 13: December Consumer Price Index (CPI), September new home sales, and expected earnings from JPMorgan Chase (JPM), Bank of New York Mellon (BK), and Delta Air Lines (DAL). 

January 14: December Producer Price Index (PPI), retail sales, Fed Beige Book, and earnings from Bank of America (BAC), Wells Fargo (WFC), and Citigroup (C).