Why the Market Is Selling Off After the Blowout January Jobs Report

How about that much-stronger-than-expected January Employment Report?

The report came in with more than double the number of jobs Wall Street had expected, but the sequential increase was far greater than the month-over-month decline depicted in ADP’s January Employment Change Report. In addition, the Unemployment Rate for January ticked lower to 4.3%, which the market also welcomed.

Looking at the mix of jobs created, it was all in the private sector, with government continuing to shed jobs.

We did see some modest revisions to the November and December jobs figures, but nothing that would detract from the upside surprise contained in the January data. And despite the strength in the January jobs figure, average hourly wages on a year-over-year basis did not budge compared to December’s 3.7% number. That suggests the job market may have tipped back to favor employers, something that could keep a lid on wage inflation.

If the Report Was So Strong, Why Is the Market Selling Off?

The logical conclusion from the January Employment Report is that we have more people working than expected, and wages are increasing at a softer pace, while numbers still point to improving disposable income when measured against recent core CPI data.

So why is the market trading off?

Most likely because of the combination of the stronger-than-expected jobs report and sticky inflation, which is renewing questions over exactly how many rate cuts the Fed could deliver this year.

As of now, the CME FedWatch Tool still shows the market expecting two 25-basis-point rate cuts this year, with the first one slated for the Fed’s June 2026 policy meeting. We know these probabilities can shift, sometimes rather quickly, and that means once again paying close attention to what Fed speakers have to say this week. We have one this morning, another this afternoon, and one more Thursday night.

That last one is Fed Governor Stephen Miran, and this Trump appointee has been steadily calling for aggressive rates cuts this year between 100-150 basis points. Will he change his tune? Probably not, but we would counter that maybe, must maybe, someone should help him interpret the economic data we’re getting. 😉

That said, we will continue to follow the data and position or re-position the Pro Portfolio as needed. That said, more folks working and improving disposable income is a nice recipe for our positions in Dutch Bros (BROS) , Amazon (AMZN) , Costco (COST) , and TJX Cos. (TJX) .

About That December Retail Sales Report

And lest I forget, yesterday’s December Retail Sales report showed that retail-only sales rose 2.1% compared to December 2024, while grocery store sales slowed to 1.5% from 2.4% in November. This tells us shoppers picked up their “seasons eatings” elsewhere, most likely at Costco, Walmart WMT, and potentially Amazon as it leans further into grocery.

Adding further credence to our view, Costco continues to win consumer wallet share. Its December adjusted U.S. comp sales figure for December came in at 6.3%, well ahead of the 1.2% gain for general merchandise stores found in the December Retail Sales report.

Turning to TJX, clothing sales for the October-December 2025 period climbed 6.5% year over year. Sizing that up against the December fall in department store retail sales suggests consumers were shopping elsewhere. Given the K-shaped economy we keep reading about, TJX is a likely beneficiary.

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At the time of publication, TheStreet Pro Portfolio was long COST, TJX, AMZN and BROS.