Stronger-than-expected payrolls put rate cuts on pause and sent gold tumbling while oil rises on geopolitical tensions
The jobs report was supposed to be good news, but Wall Street’s reaction suggests good news might actually be bad news right now. US stock futures rose modestly Thursday morning after January’s nonfarm payrolls came in at 130,000 absolutely crushing analyst forecasts. The Dow futures (YM=F) climbed around 0.2%, S&P 500 futures (ES=F) rose 0.3%, and Nasdaq 100 futures (NQ=F) gained 0.1%. But here’s the thing: the market’s initial celebratory response gave way to something more complicated. A resilient labor market should theoretically be bullish. Except when the Fed is worried about inflation and considering rate cuts, a strong labor market becomes the thing that keeps those rate cuts from happening.
- Stronger-than-expected payrolls put rate cuts on pause and sent gold tumbling while oil rises on geopolitical tensions
- The data paint an interesting picture of inconsistency
- Gold got absolutely hammered by the jobs data
- Oil is moving in the opposite direction entirely, climbing on geopolitical risk rather than economic data
- The real market narrative Thursday wasn’t about stocks or specific sectors
The labor market strength directly contradicts what equity investors have been banking on. For weeks, the narrative was simple: the economy is slowing, inflation is cooling, and the Fed will be forced to cut rates soon. Rate cuts are supposed to boost stock valuations because cheaper borrowing costs make future earnings worth more. But if the labor market is actually thriving, inflation might stay sticky, and the Fed might hold rates higher for longer. That’s the opposite of bullish for stocks chasing rate cuts.
The data paint an interesting picture of inconsistency
The January jobs report was stellar the strongest hiring month in over a year with the unemployment rate dropping unexpectedly. But here’s the catch: 2025’s end-of-year reports were revised downward to show significantly slower job growth last year. So we went from a slow 2025 to a suddenly hot January 2026. Either the labor market is genuinely rebounding, or there’s something temporary about January hiring that won’t sustain through the year.
Attention now shifts to Friday’s Consumer Price Index report, which is basically the Fed’s favorite inflation measure. A softer reading would give markets hope that price pressures are actually easing even while economic growth remains intact. That’s the goldilocks scenario: strong enough economy to not require emergency rate cuts, but soft enough inflation to allow them eventually. The CPI becomes the real market mover now.
Gold got absolutely hammered by the jobs data
Bullion fell as much as 0.6% Thursday after the strong payroll report convinced traders that the Fed won’t be cutting rates anytime soon. Traders are now pushing out their timeline for the next rate cut from June to July. That matters for gold because lower interest rates benefit precious metals they make non-yielding assets like bullion more attractive relative to rate-paying bonds. Higher rates do the opposite. Despite the losses, gold is still holding above $5,000 per ounce and has clawed back roughly half of the historic losses sustained during the meltdown at the turn of the month. Gold hit a record high above $5,595 in late January before speculative buying overheated the rally and sparked a brutal 13% crash in two sessions.
Oil is moving in the opposite direction entirely, climbing on geopolitical risk rather than economic data
Brent crude rose toward $70 a barrel while West Texas Intermediate stayed near $65. The driver? Heightened US-Iranian tensions. Trump signaled interest in nuclear negotiations, but traders remain concerned about potential military strikes and supply disruptions. Crude has gained every week this year except one, as geopolitical worries outweigh signals of abundant supply. The US crude inventory report showed supplies jumped 8.5 million barrels to the highest since June, suggesting there’s plenty of oil available. But Goldman Sachs notes the surplus is appearing in locations less significant for global pricing, which is why geopolitics trumps fundamentals right now.
The real market narrative Thursday wasn’t about stocks or specific sectors
It was about conflicting signals. Employment strength suggests no emergency rate cuts. Inflation concerns suggest rates stay higher. Geopolitical tensions support commodities. Earnings season continues with Coinbase, Applied Materials, and Rivian reporting before the weekend. Friday’s CPI becomes the immediate focus for everything markets do next.
