Jobs Report and Tariff Ruling Make Friday High Stakes
December payrolls data and a potential Supreme Court decision on Trump tariffs create a two-front catalyst for markets on January 9.
Friday is shaping up to be the most consequential trading day of young 2026.
Two major catalysts converge: the December jobs report at 8:30 a.m. ET and a potential Supreme Court ruling on President Trump's tariff authority. Either one could move markets significantly. Both landing on the same day creates unusual uncertainty.
Futures are hovering near flat as traders wait for clarity.
The Jobs Report: First "Clean" Look Since the Shutdown
Economists expect December nonfarm payrolls to show roughly 60,000-70,000 new jobs, down from November's 64,000 gain. The unemployment rate is forecast to tick down to 4.5% from November's four-year high of 4.6%.
But the context matters more than the headline. This is being called the first "clean" jobs report following the 43-day federal government shutdown that distorted Q4 2025 data. November's reading was particularly muddied by shutdown-related furloughs and return-to-work effects.
Average hourly earnings should provide the inflation signal the Fed is watching. Consensus expects a 0.3% month-over-month increase, accelerating from November's 0.1%, with annual wage growth ticking up to 3.6%.
A hot wage number would likely push Treasury yields higher and pressure rate-sensitive stocks. A cool reading would reinforce the disinflation narrative and give the Fed more room to cut.
Fed Implications
The stakes for monetary policy are real. The January 27-28 FOMC meeting is approaching, and futures markets currently price an 84% probability the Fed holds rates steady.
Minneapolis Fed President Neel Kashkari said earlier this week that the central bank is "pretty close to neutral"—suggesting the aggressive cutting cycle that began in September 2024 may be ending. A strong jobs report would validate that assessment.
Moody's economist Mark Zandi has been more dovish, predicting three cuts before midyear. A weak December print would support his view that labor market softening will force the Fed's hand.
Either way, today's data resets the debate. The Fed has been operating with incomplete information since October. Now they get a cleaner picture.
Supreme Court Tariff Ruling
The second catalyst could arrive at any point during Friday's session. The Supreme Court listed January 9 as an opinion day, and the closely watched tariff case—challenging Trump's authority to impose duties under the International Emergency Economic Powers Act—could be among the rulings released.
At oral arguments in November, several justices expressed skepticism about the President's unilateral tariff authority. Chief Justice John Roberts noted that imposing tariffs and taxes "has always been the core power of Congress." Justice Neil Gorsuch, a Trump appointee, questioned whether Congress could effectively reclaim delegated authority once handed over.
The financial stakes are enormous. Tariffs brought in $195 billion in fiscal 2025 and $62 billion so far in 2026. U.S. Customs collected more than $133 billion specifically from IEEPA-authorized duties as of mid-December.
Treasury Secretary Scott Bessent predicted a "mishmash" ruling—neither a complete victory nor total defeat for the administration. He noted the White House has backup authority under the 1962 Trade Act to maintain most tariffs regardless of the Supreme Court outcome.
Market Positioning
The dollar hit a one-month high Thursday as traders positioned for Friday's events. Treasury yields have been grinding higher all week, with the 10-year approaching 4.75%.
If the jobs report comes in hot and the Supreme Court rules against tariffs, the cross-currents get complicated. Strong employment would push yields higher, but tariff uncertainty could trigger a risk-off move. Markets might not know which narrative to follow.
The safer positioning appears to be the one traders have chosen: flat futures, elevated cash levels, and options hedges in place. The VIX has crept up to 15—not panicked, but attentive.
Trading the Event
For active traders, the challenge is sequencing. The jobs report drops before the open, allowing a reaction during premarket trading. The Supreme Court typically releases opinions at 10 a.m. ET—potentially reversing or accelerating whatever move the jobs data triggers.
That makes holding overnight positions risky. Gap fills could be violent in either direction. The smart money appears to be waiting for both events to clear before committing capital.
One approach: watch sector rotation signals. Defense stocks rallied hard Thursday on Trump's budget proposal. If tariffs get struck down and defense spending looks threatened by deficit concerns, that trade could unwind quickly.
Conversely, if the court upholds tariff authority and jobs come in soft, rate-sensitive growth stocks could finally catch a bid. The tech rotation that hit NVIDIA this week would have room to reverse.
What the Week Has Set Up
All three major indexes remain on track to close the first full week of 2026 higher. The S&P 500 is up nearly 1% through Thursday, the Dow has gained about 1.8%, and the Nasdaq is up 1.1%.
But those gains came before Friday's dual catalyst. The market is essentially betting that neither the jobs report nor the Supreme Court will deliver a major surprise. If that bet is wrong, the weekly gains could evaporate fast.
The record highs set Tuesday when the Dow crossed 49,000 and the S&P 500 hit 6,944 feel like they happened longer than three days ago. Friday will determine whether that optimism was justified or premature.