Investors are on edge about the January jobs report after an anxious week on Wall Street — but the survey is likely to tell them more about the past than the future of a fragile U.S. labor market.

Stocks were hit hard last week before staging a dramatic recovery on Friday that catapulted the Dow Jones Industrial Average above the 50,000-point thresholdfor the first time ever. Meanwhile, U.S. Treasurys finally saw safe-haven demand as silver, gold, bitcoin and other hot areas of the market convulsed.

A pair of crucial reports economic reports this coming week, on employment and consumer prices in January, could help sooth frayed nerves if they show a stabilizing labor market and steady inflation.

Yet the anxiety of investors could ratchet up again and spill over into stocks and bonds if employment and inflation take a turn for the worse.

The only thing investors can count on in the employment report is that it will show job creation was bad in 2025 — maybe even really bad. January’s report will also include an update of how many new jobs were created all of last year.

January jobs forecast

Economists polled by the Wall Street Journal estimate the U.S. created a modest 55,000 new jobs in January, which would not be a bad result.

Yet the first report of the year is often a hornets’ nest to decipher, because of winter weather and new methods put in place by the Bureau of Labor Statistics to try to improve the accuracy of the employment report.

Perhaps more critically, the unemployment rate is expected to stay at a low 4.4%. The jobless rate tends to be the more useful labor-market gauge in January.

“The January unemployment rate will matter even more to the markets than payrolls,” economists at Bank of America wrote in a note to clients.

The jobs report comes out Wednesday, a few days late, because of a brief budget dispute in Congress last week.

Market expectations

If the January jobs report meets or exceeds Wall Street’s forecast, financial markets are likely to see a further broadening out of the bull market’s rally beyond tech stocks. 

A disappointing report, however, could fuel more of the violent moves we’ve seen this year in markets.

“My takeaway is that the labor market is mostly in balance,” said Tracy Chen, portfolio manager at Brandywine Global.

While recent job-opening data fell to pandemic-era levels, the Trump administration’s immigration crackdown also has meant fewer workers, she noted.

But looking by industry, the one thing that stands out is the drop in job openings in professional and business services, Chen said: “That’s the AI impact. It’s a little concerning.”

Hornets’ nest

The January jobs report always comes with big caveats, and economists caution against overreacting to it.

Employment in the first month is often disrupted by poor winter weather, for one thing. And all the temporary hiring for the holiday shopping season from Thanksgiving through Christmas turns into mass layoffs in January.

In fact, the economy typically loses 2 million to 3 million jobs every January. These job losses never get reported by the press, however, because Wall Street and Washington pay attention to the seasonally adjusted headline number.

The BLS adjusts the job totals to take into account the huge seasonal swing in employment from December to January. Basically, what these adjustments try to tell us is whether overall U.S. employment was better or worse in January than usual.

The problem is that seasonal hiring patterns have been altered by the pandemic, and sometimes the adjustments are off the mark. Each year, the BLS tries to correct for this, but its new process can also skew the January results.

“We see potential for seasonal-adjustment mischief in the January data,” said Richard Moody, chief U.S. economist at Regions Financial.

2025 was a bad year

The BLS every January provides a more accurate estimate of how many jobs were created in the prior year, using company tax records to get close to the truth.

The BLS has already said employment growth was overstated by a preliminary 911,000 from April 2024 to March 2025 — an unusually large error that spurred Trump to fire the former commissioner. Expect the “final” tally to be close to that number.

Yet job creation from April to December of last year could be lowered by an average of 20,000 to 30,000 a month, economists at Bank of America estimate. The Federal Reserve said the downward revisions could be even larger at 60,000 a month.

Whatever the case, 2025 is shaping up to be the worst period of job creation in 16 years, excluding the pandemic era.

The BLS now shows the economy added just 584,000 new jobs in 2025, far below the recent 2 million annual average.

In a worst-case scenario, employment in 2025 may have actually shrunk.

“Last year’s data will be revised downward soon to likely show that there was virtually no growth in payroll employment in 2025. Zero. Zip. Nada,” Federal Reserve governor Chris Waller predicted last week.

Old news? Not at all.

Investors may take it as a sign the labor market was in far worse condition than they believed before 2026 got underway. The reaction on Wall Street might not be pretty.

That’s because optimism around the economy has pushed up small-cap stocks in the Russell 2000 index and other areas of the market that could benefit if growth picks up. The Russell 2000 was up 7.6% on the year as of Friday, outperforming the S&P 500’s 1.3% gain.

Investors also have been betting on the bull market to broaden beyond tech, which has its own woes as investors sift through thorny issues around the artificial-intelligence trade.

Growing BLS skepticism

The usual problems that surface each year in the January jobs report aren’t the only problem. Economists and investors still put a lot of stock in the monthly jobs report, but they also worry it’s becoming less accurate.

How come? The agency lost scores of top officials in 2025. It’s budget has been squeezed for years. And it’s still without a permanent commissioner since President Donald Trump fired the previous BLS chief last summer.

Critics say the BLS has to upgrade its technology and rapidly modernize how it collects economic data to make the jobs report more accurate. It’s a tall task given the agency’s demoralized condition.

Despite Friday’s surge, sharp tech declines led the S&P 500 index to book a 0.1% weekly loss, while the Nasdaq Composite fell 1.8% and the Dow gained 2.5%.