After being burned by December's miserable jobs number, traders are more than ready to write off any weakness in the January employment report to bad weather.
Yet, markets traded Thursday amid expectations that the number will be in line or easily blamed on weather. Economist expect 185,000 nonfarm payrolls and a steady unemployment rate of 6.7 percent, according to Thomson Reuters.
The extraordinary weakness of December's 74,000 nonfarm payrolls was attributed partly to weather. That number could be revised higher, though not likely anywhere close to the 200,000 originally expected.
A UPS worker makes deliveries Wednesday in Burlington, Vt.Getty Images
"I think people are thinking it's going to be OK because ADP was OK, and I think they think the survey week captured one of the warmer weeks of January," said Peter Boockvar, chief market analyst at the Lindsey Group. ADP reported that 175,000 private sector jobs were added in January, but traders are skeptical, particularly after ADP was over 200,000 in December.
Stocks surged Thursday against the backdrop of improvement in emerging markets and a better U.S. jobless claims report. Other factors were also at play, and analysts pointed to extreme oversold conditions.
The jumped 1.2 percent, to 1,773, closing three points above a very key technical level. Bond yields moved higher, with the 10-year yield back to 2.70 percent.
Boockvar said the move higher could be a "dead cat" bounce, and some traders questioned the stock market jump.
"The risk on trade is going on a little bit here," one trader said. "Our market is ripping higher. It's an oversold bounce for sure. You look at the 10-year and it's not dislocating to the downside that much. It's a little weaker. … I'd be more willing to trade this rally if the 10-year was at 2.75. You're adding on the dip ahead of a very big number."
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Diane Swonk, chief economist at Mesirow Financial, expects to see just 130,000 jobs and a drop in hours worked because of cold and snow across the country.
"We've got to get through the hibernation and then defrost," she said, noting the economy should rebound once the extreme weather stops. "I think the underlying labor market is good. We're moving around economic activity. … I think we're going to get all of this back."
Challenger Gray layoff data Thursday was discouraging, as it showed job cuts jumping 47 percent from December. The heaviest layoffs were in retail.
"Retail is hit hard; malls are hit hard," Swonk said. "Chain store sales were terrible. … There was more retail firing than usual. It was exacerbated by the weather. It's also due to deep discounting. These guys don't have any margins anymore. They had a mismatch between where the people were needed and where they were hired."