One Day to Go: Jobs Data Looms Amid Geopolitics

0:05Welcome to the Schwab Market Update Podcast, where we prepare you for each trading day with a recap of recent news and a look at what's ahead. I'm Keith Lansford, and here is Schwab's early look at the markets for Thursday, January 8th. Focus today turns squarely ahead to Friday's December non-farm payrolls report, which could have Federal Reserve policy implications. Major indexes finished down yesterday for the first time this week, running into moderate selling late in the session. Geopolitics continue to be on participants' plates amid fallout from Venezuela events last weekend. Estimates for non-farm payrolls put jobs growth near 55 ,000, with unemployment steady at 4.6 percent and weekly wages up 0.3 percent.

0:59The so-called whisper number on Wall Street is a lackluster 45 ,000. The last several jobs reports disappointed, averaging just 22 ,000 over the prior three months, and data could help determine if and when the Fed cuts rates again. Next week's inflation data is also key. Even though the government shutdown ended nearly two months ago, there still could be some hitches in tomorrow's data, possibly resulting in revisions down the road. Investors should also check for any revisions to data collected in the three months before December, as Fed Chairman Jerome Powell warned a few weeks ago that labor data may have been distorted and policymakers might look at it with a somewhat skeptical eye.

1:45Jobs data began coming out of the woodwork yesterday with December's ADP private employment report revealing 41 ,000 jobs created. That was below the 45 ,000 consensus, and all the gains came from services. Goods-producing job creation fell, not a good sign for the manufacturing sector. It also squares with recent government jobs reports showing more employment growth in sectors like health care and social services, though construction jobs also surged in November, possibly reflecting the build-out of data centers related to the AI boom. Mining could be a sector to watch tomorrow for any signs of stronger demand related to recent rallies in the metals markets.

2:27However, jobs in the oil patch could decline as crude oil remained just above break-even levels for producers last month. In another possible payrolls preview, the Job Openings and Labor Turnover Survey, or JOLTS, report released yesterday showed openings slipped in November to a 14-month low of 7.146 million, well below the briefing.com consensus of 7.6 million. The government also downwardly revised October's openings. In other data Wednesday, ISM Services PMI for December climbed to 54.4 percent compared with consensus for 52.2 percent. Anything above 50 percent indicates expansion. Prices paid fell slightly but remained historically high and employment rose into expansion mode for the first time since May.

3:20More jobs data is due soon before today's open when investors receive the December Challenger layoffs report. The November report showed 71 ,000 job cuts. Market focus after the jobs report tomorrow could turn to Washington as the Supreme Court announced it will release opinions starting at 10 a.m. Eastern time Friday. One of the ones investors are waiting for is on President Trump's tariffs, a case argued before the court late last year. It's unclear if that ruling will be announced Friday, but it's a potential catalyst for stocks, especially if the court goes against the administration. However, even a negative ruling wouldn't immediately change things.

4:02If the court were to rule against the tariffs, it could trigger a complicated refund process, but the administration could use other emergency authorizations to impose tariffs, said Michael Townsend, Managing Director of Legislative and Regulatory Affairs at Schwab. He was referring to refunds that the administration might owe many companies if the court rules some of the tariffs were unconstitutional. As a reminder, the court isn't ruling on all the tariffs Trump imposed, but on imports from about 100 countries, as well as some of the tariffs imposed on Mexico, Canada, and China. Auto, steel, and semiconductor tariffs aren't affected by the case.

4:44Treasury yields initially fell Wednesday on the soft ADP and job openings reports and possible safe haven buying amid geopolitical issues sinking to the middle of their near-term range between 4 % and 4.2 % for the 10-year note. Historically, Treasuries have rallied on a safe haven bid when geopolitical tensions rise, said Cooper Howard, Director of Fixed Income Research and Strategy at the Schwab Center for Financial Research. Absent geopolitical issues, yields are likely to remain range-bound in the near term. The weak of an expected ADP figure contributed to a rally in Treasuries, but we would caution from extrapolating ADP to Friday's labor report.

5:28Historically, the ADP and non-farm payrolls haven't often correlated, so a weak ADP in no way signals a weak payrolls reading. Despite Wednesday's weak economic readings, the futures market, priced in just 12 % odds of a January rate cut as of late Wednesday, according to the CME FedWatch tool. That's down from earlier this week, but investors might consider monitoring this again after Friday's jobs data. Futures trading doesn't bake in 50 % odds of a rate cut until the Fed's April meeting. Any sign of softness in Friday's jobs report could send odds higher, though January still seems like a stretch based on the reticence Fed Chairman Jerome Powell indicated at his December press conference.

6:13The Fed has cut rates three straight meetings, and minutes from the December meeting indicated some policymakers were on the fence about December's cut and might want to pause to watch data. Softness turned up in the oil market this week after the Trump administration announced that Venezuela will give supplies to the U.S. The plan is to sell the oil, put the proceeds in U.S. banks, and then distribute back to Venezuela eventually. This put pressure on oil prices, which already traded near one-year lows amid a heavy supply overhang. Crude dipped to three-week lows, just above$56 per barrel Wednesday.

6:53Energy-related stocks traded both directions earlier this week, some initially charging ahead on hopes for more access to supplies before some pullback. It could take years for significant amounts of Venezuelan exports to resume, experts say, but in the meantime, several major oil firms could potentially benefit if Venezuela is forced to pay them back for assets it seized earlier this century. Additionally, oil services firms like Baker Hughes, which represent the picks and shovels contingent of the oil sector, might find a market for their services in repairing Venezuela's deficient oil infrastructure.

7:32Wednesday featured major indexes fighting for another rally until late in the session when they lost the battle and settled lower almost across the board. The exception was the tech-heavy NASDAQ, which closed with light gains. Some pressure on Wall Street might have come from the day's week jobs data, though loss of momentum in some areas that boosted stocks earlier in the week, including energy, memory chip makers, and defense firms, probably hurt as well. Semiconductors dropped 1 % as a sector yesterday, hurt by sharp declines in companies like Western Digital, Marvell Technology, and Texas Instruments.

8:10On the sector front, only three of 11 S &P sectors rose Wednesday, a sharp change from nine on Tuesday. Healthcare led, followed by communications and infotech. Some of the sectors that rallied over the last month, including materials and financials, finished low on the list and energy slumped as oil fell on President Trump's statement that the U.S. will be getting Venezuelan oil. It's just one day, however, and too soon to say there's a change in the rotation trade that's lifted some of these areas last quarter. About 60 percent of S &P 500 companies still trade above their 50-day moving averages.

8:49That's down from the intraday peak of 68 % yesterday, but still tells the tale of a market where a rising tide is lifting most boats. Looking at individual performance Wednesday, Intel powered to 6 % gains, posting its best level since April of 2024. The rally came after Intel introduced new products earlier this week at the CES 2026 conference. Eli Lilly surged 4 % Wednesday after the Wall Street Journal reported Lilly is in advanced tox to acquire clinical-stage biopharma company Ventix Biosciences for more than$1 billion. Ventix focuses on autoimmune, inflammatory, and neurodegenerative diseases.

9:35Lilly confirmed the report later, saying it had entered into a definitive agreement to buy the company. Strategy rose nearly 3 % on news that finance firm MSCI decided to keep Strategy and other crypto firms in its major equity indexes. Warner Brothers Discovery inched up after the company rejected Paramount Skydance's amended hostile bid, Barron's reported. Warner Brothers Discovery is in a merger agreement with Netflix. Regeneron Pharmaceuticals rose nearly 5 % Wednesday after getting upgraded to buy from underperformed by Bank of America. And Lockheed Martin and Northrop Grumman both fell sharply yesterday after President Trump said he will not permit defense companies to issue dividends or stock buybacks.

10:22This likely helped explain weakness in the industrial sector. Material stocks fell as metal prices slipped Wednesday.

10:32The Dow Jones Industrial Average lost 466 points Wednesday, or 0.94%, to 48 ,996.08. The S &P 500 Index fell 23.89 points, or 0.34%, to 6 ,920.93. And the Nasdaq Composite added 37.10 points, or 0.16%, to 23 ,584.27. This has been the Schwab Market Update Podcast. To stay informed, visit www.schwab.com slash market update or follow us for free in your favorite podcasting app. And if you like what you've heard, please consider leaving us a rating or a review. It really helps new listeners find the show. Join us for another update tomorrow.

11:29For important disclosures, see the show notes and schwab.com slash market update podcast.