The labor market just surprised investors and it may change the Federal Reserve narrative.

In today’s episode of Markets with Megan, Megan Horneman breaks down the delayed January Non-Farm Payrolls report, which showed the U.S. economy added 130,000 jobs, beating expectations and signaling more resilience than many anticipated.

Despite prior concerns about weakening job openings and rising layoffs, this report revealed encouraging signs:

📈 Payroll growth beat forecasts

⬇️ Unemployment ticked down to 4.3%

👷 Temporary workers increased for the third straight month — often a leading indicator of hiring strength

⏱️ Average workweek rose, another positive signal

🏥 Gains in private education, health services, and professional/business services

Although annual revisions showed fewer jobs were created last year than previously reported, the weakness appears to be further behind us. The data suggests the labor market may be stabilizing — not deteriorating.

For the Federal Reserve, this likely means no rush to cut interest rates. A resilient jobs market gives policymakers room to stay patient, especially ahead of upcoming inflation data.

Markets reacted sharply rallying initially before reversing, highlighting just how sensitive investors remain to labor and inflation signals in early 2026.

📊 Is the labor market finding a bottom?
📉 Will the Fed stay on hold longer than markets expect?
📈 And what does this mean for equities going forward?

Megan walks through what investors should watch next.

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https://youtu.be/6VmZ616ynhE

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