After the December employment report was released, showing a mixed picture of the labor market, it calmed fears about a recession.
As of the midday session, Nasdaq Composite closed at 49480.41, up 0.9%. Dow Jones Industrial Average gained 213.52 or 0.43% points.
Gains cap off the first week of trading in 2026. The S&P 500 has risen by approximately 0.9%, while Dow Jones and Nasdaq each have risen roughly 1.8% and 1.2%.
Wall Street’s narrative has been reaffirmed by the employment numbers: The Federal Reserve will likely remain in a holding pattern for January.
The market was able to reduce volatility by stating that it would hold on to stocks through the earnings season of the first quarter. This marked a major psychological change.
Market snapshot: indexes, sectoral movers and breadth
The nonfarm payrolls grew by only 50,000, which is far below the Dow Jones consensus forecast of 73,000 and a significant slowdown compared to November’s revised 56,000 figure.
Prior months have seen downward revisions of 76,000 total jobs. 68,000 were revised in October from an initial decline of 105,000, and then 8,000 more in November. This indicates a tighter labour market than the headline estimates suggest.
The unemployment rate fell to 4,4%. This was slightly lower than expected, at 4.5%. Wage growth increased to 3.8% annually, which is higher than anticipated, and exceeded expectations by 3.6%.
The mixed signals of weak job creation, falling unemployment, and rising wages left bulls with room to assert that the labor market is resilient.
Healthcare grew by 21,000 positions. Leisure and Hospitality added the most jobs, with 47,000.
Retail employment fell by 25,000 jobs, while government only added 2,000.
Financials and Industrials were the best performers.
Russell 2000, a small-cap index, also gained during the week.
The Treasury yields were choppy, but eventually drifted up after first spiking down on the payrolls weak number.
Markets reduced the likelihood of a Fed cut to 5% from earlier this week, which was 12%.
Dollar index has reached its highest level in four weeks, 99.091, indicating renewed confidence about the durability of U.S. economic growth.
Driving and Outlook
The Federal Reserve policy announcement on January 28, next week’s data for retail sales, inflation, and earnings are all potential catalysts.
Markets have now priced in 71% of a total 50 basis point rate cut in 2026. However, the timing is still uncertain.
Risk appetite is strongly in favor of stocks until the Fed makes a pivot to a more dovish stance or economic data worsens dramatically.
Gains reflect renewed confidence in the market as it enters 2026’s full first trading week: there are no rate cuts imminent, but also no recession.
Next week, traders are likely to pay close attention to Fed speakers as well as regional economic data in order test this thesis.
The post US Midday Market Brief: S&P500 Rises 0.7% As Jobs Data Lifts Sentiment may be updated as new developments unfold.
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