The labor market showed more signs of cooling this week. The ADP private-sector jobs report for January came in far weaker than expected, with hiring essentially flat, reinforcing concerns that companies are becoming more cautious early in 2026. That message was echoed by Challenger, Gray & Christmas, which reported that announced layoffs jumped to their worst January level since 2009, while planned hiring fell to record lows. While these figures can be volatile and don’t always translate directly into actual job losses, together they point to a labor market that is losing momentum as higher rates and slower growth weigh on business confidence. These signals matter because they shape how the Federal Reserve responds. The numbers are telling our central bank that the labor market is still fragile. Policymakers have said they want to give recent rate cuts more time to work. Typically, that window is around six to eight months. But our central bank can’t ignore a weakening labor backdrop. Waiting too long may force more aggressive actions later. Acting earlier requires less easing overall. The game of being proactive or reactive will now take center stage in my view.
Earnings season continued with mixed results across several high-profile names. Yum! Brands and Chipotle posted solid results but struck a more cautious tone around consumer spending trends. Uber reported strong growth in trips and bookings, but investors focused on a more measured outlook for profitability. Eli Lilly delivered another strong quarter, driven by demand for its blockbuster drugs, and reaffirmed confidence in longer-term growth. On the tech side, Alphabet and Amazon both reported healthy revenue growth, but markets reacted negatively to commentary around continued heavy spending on infrastructure, particularly tied to AI and cloud investments.
That spending focus helped spark a sell-off in the back half of the week, led by large-cap tech and AI-linked stocks. Investors are growing uneasy about how long it will take for massive capital investments in artificial intelligence to translate into meaningful profits, especially with economic growth slowing. In the near term, this has created more volatility and sharper pullbacks in parts of the market that had been leading performance. Over the longer term, these investments still point to confidence in AI as a transformational technology, but expectations are becoming more grounded as markets demand clearer paths to returns.
Other “risk” assets more broadly were choppy as well. Cryptocurrencies experienced notable swings during the week, moving lower alongside tech stocks before stabilizing late in the period. This level of volatility serves as a reminder that digital assets often move in the same direction as riskier equities when investor sentiment turns cautious. Markets finished the week on a softer and “relief rally” note as investors continue to balance slowing economic data with still-resilient corporate earnings. We have mentioned this before, but it’s important to remember that it is completely normal to experience periods of both momentum and weakness in the same small window. We remain focused on what matters most: the long-term strength of the markets and keeping your personal financial plan aligned with your goals.
Interesting to Note
January’s layoff announcements were the highest for that month since the depths of the financial crisis, highlighting how quickly corporate sentiment can shift even without an official recession.
Looking Ahead
- Jobs Data Watch: Markets will be closely focused on upcoming labor data to see if government reports confirm the recent weakness shown in private surveys. We will get our next CPI reading next week.
- Earnings Continue: More results from tech, healthcare, and consumer companies will help shape expectations for growth in 2026.
- AI Spending Focus: Investors will remain sensitive to updates on capital spending plans and whether companies signal tighter discipline.
- Volatility Check: With markets reassessing growth and valuation assumptions, short-term swings may continue even as long-term themes remain intact.
Stay safe, dry, and warm this weekend!
https://www.cnbc.com/2026/02/04/adp-jobs-report-january-2026.html
https://www.cnbc.com/2026/02/05/layoff-and-hiring-announcements-hit-their-worst-january-levels-since-2009-challenger-says.html
https://www.cnbc.com/2026/02/06/bitcoin-price-today-60000-in-focus.html
https://www.cnbc.com/2026/02/05/aws-q4-earnings-report-2025.html
https://www.cnbc.com/2026/02/05/stock-market-today-live-updates.html
Christopher E. Wasson, CFP®
President
Mosaic Asset Partners, LLC
1122 Kenilworth Drive, Suite 310
Towson, MD 21204
410.821.0089 fax 410.821.5993
MosaicAssetPartners.com
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Mosaic Asset Partners, LLC is not affiliated with Kestra IS or Kestra AS. Investor Disclosures: https://www.kestrafinancial.com/disclosures
The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.
