Market Insider

Wall Street awaits confirmation of improving labor market

Traders on the floor of the New York Stock Exchange.
Seth Wenig | AP

Wall Street's muffled slide could continue this week as investors sit on their hands, waiting for Friday's December jobs report to confirm the Federal Reserve's view of a positive trend in the labor market.

"A primary reason the Fed started the taper is the jobs market seems to be improving, so the jobs number remains at the forefront," said Bill Stone, chief investment strategist at PNC Asset Management, referring to the Fed's decision to begin reducing its bond-buying program this month, cutting $10 billion from what was $85 billion in monthly asset purchases.

"Certainly some investors are sitting at home like I am," said Paul Nolte, managing director at Dearborn Partners in Chicago, where brutal weather kept many indoors.

"If we look at the weekly jobless claims numbers, they are indicating a reasonably good payrolls report, probably 175,000 to 200,000," he said.

A payroll addition of 200,000 would be "pretty close to consensus, which I think leads them to take another $10 billion in taper," said Stone. That would keep the central bank on schedule to essentially end asset purchases by year-end, he said.

Minutes from the the Fed's December policy meeting Wednesday afternoon could be a market-moving diversion ahead of the main event.

"Wednesday might be interesting—you never know what tidbits might show up in the minutes," Stone said.

But given the comments by outgoing Federal Reserve Chairman Ben Bernanke last week, "I don't think the minutes will carry much weight," Nolte said.

—By CNBC's Kate Gibson