December Employment Data Falls Short of Projections as Jobless Rate Surprises Analysts

S&P 500 Futures Edge Higher as Investors Analyze Latest Jobs Data

This morning, March S&P 500 E-Mini futures are up by 0.33%, as traders assess the implications of the newly released employment report.

U.S. Labor Market Update

The Bureau of Labor Statistics’ January 2026 report revealed that the U.S. job market ended last year on a subdued note. December’s nonfarm payrolls increased by a seasonally adjusted 50,000, marking a decline from November’s revised 56,000 and falling short of the 73,000 jobs economists surveyed by Dow Jones had expected. Interestingly, the unemployment rate improved to 4.4%, beating the consensus estimate of 4.5%. This mixed data paints a complex picture: while companies appear cautious about hiring, household employment figures remain relatively robust.

Tariff Ruling Anticipated

Investors are also awaiting a possible Supreme Court decision regarding President Trump’s broad tariffs. Numerous businesses are seeking to recover portions of the billions paid in duties so far.

Market Recap: Mixed Results and Sector Moves

Major U.S. indices ended the previous session with mixed performances. Data storage stocks were under pressure, with Seagate Technology Holdings dropping over 7% and Western Digital losing more than 6%. Software names also retreated, as Datadog fell by more than 7% and Autodesk declined over 5%. AbbVie shares slipped more than 3% following a downgrade by Wolfe Research. On the upside, defense stocks rallied after President Trump proposed raising U.S. military spending to $1.5 trillion by 2027, lifting AeroVironment by over 8% and Huntington Ingalls Industries by more than 6%.

Recent U.S. Economic Data

• Initial jobless claims rose by 8,000 to 208,000, slightly below the expected 213,000.
• Third-quarter nonfarm productivity increased by 4.9% quarter-over-quarter, matching forecasts, while unit labor costs dropped 1.9%, contrary to expectations for no change.
• The October trade deficit narrowed sharply to $29.4 billion, far better than the anticipated $58.1 billion and the lowest since 2009.
• Consumer credit in November increased by $4.23 billion, missing the $10.1 billion estimate.

Federal Reserve Outlook

Fed Governor Stephen Miran indicated on Thursday that he expects interest rates to be cut by 150 basis points this year to bolster the labor market. He noted that underlying inflation is close to the Fed’s target, suggesting a stable medium-term inflation outlook.

Futures markets currently reflect an 86.2% probability that rates will remain unchanged and a 13.8% chance of a 25 basis point cut at the upcoming Fed meeting.

Upcoming U.S. Economic Releases

• Preliminary data for October building permits and housing starts, delayed due to a government shutdown, will be published today along with September figures. Economists expect 1.35 million building permits and 1.33 million housing starts for October.
• The University of Michigan’s preliminary January Consumer Sentiment Index is also due, with forecasts pointing to a reading of 53.5, up from December’s 52.9.
• Remarks from Minneapolis Fed President Neel Kashkari and Richmond Fed President Tom Barkin are also on the agenda.

Bond Market Snapshot

The yield on the benchmark 10-year U.S. Treasury note stands at 4.192%, up 0.17%.

European Markets and Economic Data

The Euro Stoxx 50 Index climbed 0.93% this morning, reaching a new all-time high. Technology shares led the advance, buoyed by strong fourth-quarter results from TSMC. Mining stocks also surged, with Glencore jumping over 8% after resuming buyout discussions with Rio Tinto. Eurostat reported that Eurozone retail sales in November exceeded expectations, providing a lift to the region’s economy. Meanwhile, German exports unexpectedly declined, but industrial production rose for a third consecutive month, thanks to a rebound in car manufacturing. Investors remain focused on the U.S. jobs report and a potential Supreme Court decision on tariffs. In corporate news, ASML Holding gained over 4% after HSBC raised its price target.

Key European Economic Releases

• German exports for November fell 2.5% month-over-month, missing expectations.
• German imports rose 0.8% month-over-month, ahead of the 0.2% forecast.
• German industrial production increased 0.8% month-over-month, outperforming the expected 0.6% decline.
• French industrial production slipped 0.1% month-over-month, better than the anticipated 0.2% drop.
• Eurozone retail sales for November rose 0.2% month-over-month and 2.3% year-over-year, both above forecasts.

Asian Markets: Gains Across the Board

Asian equities finished higher today. China’s Shanghai Composite Index advanced 0.92%, while Japan’s Nikkei 225 surged 1.61%.

China Market Highlights

The Shanghai Composite rose as easing deflationary pressures improved investor sentiment, with materials stocks leading the way. The index posted its strongest weekly gain since November 2024. December’s consumer inflation edged up, mainly due to higher food prices, while annual inflation remained flat—the lowest since 2009—fueling expectations for further stimulus. Producer prices fell less than expected, marking the smallest decline in over a year. ING Bank’s Lynn Song commented that subdued inflation should allow for additional monetary easing. Investors are now awaiting December’s trade and lending data for further economic insights. In corporate news, MiniMax Group, a leading Chinese AI startup, soared over 109% in its Hong Kong debut after raising $619 million.

• China’s December CPI increased 0.8% year-over-year, matching forecasts.
• December PPI declined 1.9% year-over-year, slightly better than the expected 2.0% drop.

Japan Market Highlights

The Nikkei 225 rallied after the yen weakened and Fast Retailing reported strong earnings, with the Uniqlo parent jumping over 10% and contributing significantly to the index’s gains. Auto stocks also benefited from the weaker yen. Sentiment improved after China announced it would not restrict exports of dual-use items to non-military Japanese firms. On the economic front, household spending rebounded in November, and the leading economic indicators index reached an 18-month high. The Nikkei Volatility Index fell sharply to 26.37.

• November household spending in Japan rose 6.2% month-over-month and 2.9% year-over-year, beating expectations.
• The November Leading Index came in at 110.5, slightly above the 110.4 forecast.

Pre-Market U.S. Stock Movers

• Shares of Taiwan Semiconductor Manufacturing Co. (TSMC) listed in the U.S. gained about 0.8% before the open after reporting robust Q4 revenue.
• Chipmakers Intel and Micron Technology advanced over 2% and 1%, respectively, following TSMC’s positive results.
• Rocket Companies climbed more than 7% and UWM Holdings rose over 5% in pre-market trading, buoyed by President Trump’s plan to purchase $200 billion in mortgage bonds to make housing more affordable.
• Revolution Medicines surged over 15% after reports that Merck is considering an acquisition.
• Qualcomm slipped more than 1% after Mizuho downgraded the stock to Neutral with a $175 price target.

For a full list of pre-market stock movers, see more here.

Today’s U.S. Earnings Focus: Friday, January 9th

• Platinum Group Metals (PLG)
• Environmental Tectonics (ETCC)