Friday's jobs report calmed fears of an impending recession and could cause the Federal Reserve to hike rates sooner than expected, Wells Capital Management's James Paulsen said.
"I think it very much puts the Fed back in play for March perhaps in terms of tightening," the chief investment strategist told CNBC's "Squawk on the Street" following the report's release.
The Bureau of Labor Statistics reported that 151,000 nonfarm jobs had been created in January, versus consensus expectation for 190,000.
Despite the lower headline number, Paulsen said the report was positive because unemployment ticked down to 4.9 percent and wages picked up at the fastest pace of the recovery.
But the results are mixed bag for U.S. markets, Paulsen said. If the unemployment rate continues to fall and wages keep rising while economic growth remains stagnant at roughly 2 percent, the Fed will be forced to raise rates, he said.
Last week, the Commerce Department reported that the economy grew at 0.7 percent in the last quarter, below expectations.
"That's sort of a stagflation sort of Fed tightening, where they have weak growth but they have to raise rates in the face of rising wage pressures," he said. "That would be bad."
The Fed has indicated it intends to raise rates four times this year, but most market watchers have forecast the central bank would hike only once or twice. On Friday, the dollar strengthened, Treasurys sold off and stocks fell as the market mulled the possibility of a March interest rate hike.
Lindsey Piegza, Stifel Fixed Income chief economist, called the report disappointing.
But because job gains remained on pace with those prior to the Fed's rate hike in December, the central bank will likely continue to raise rates, despite weakness in retail and business spending and productivity, she said.
"I think it's very clear that the economy is not on sound footing, but from the Fed's perspective, they seem to be ignoring the current slew of very disappointing trends in the economy, focusing instead on cherry picking the data and expectations of further growth longer term," she told "Squawk on the Street."
The U.S. economy is not capable of continuing to produce the blockbuster job growth that Americans saw in the final quarter of 2015, RBS senior economist Michelle Girard said ahead of the jobs report.
The fourth quarter as a whole saw "blow out" job growth that averaged 284,000 jobs per month despite other data that suggest the U.S. economy is slowing, Girard said.
"I think the first quarter we'll see the reversal of that," she told CNBC's "Squawk Box." "There were some special things, too, going on in December, like all the hiring of couriers and messengers ahead of the holiday season."
Girard said she believes the long-term trend in payroll growth is closer to 180,000 per month.
While she said she is more optimistic than most about the U.S.economy, she warned that current financial conditions could undermine economic growth to some extent.
"Things look fine now, but if financial conditions tighten — if the equity market keeps going down, if credit spreads continue to widen — could that ultimately come back and undermine domestic demand no matter what the initial catalyst was?" she asked.
The is down more than 7.5 percent this year, and the Dow has slid about 6.7 percent as markets contend with interest rate uncertainty, plunging crude oil prices, and fears of slowdown in China fanned by the government's devaluation of the yuan.
"A the end of the day, I don't think any of these issues — Fed tightening or weakness, Chinese devaluing the yuan — should cause a 15 percent decline in the market, but combining, that's the problem here," Andrew Slimmon, portfolio manager at Morgan Stanley Investment Management, told "Squawk Box."
Correction: Girard is with RBS.
— CNBC's Tobi Taylor contributed reporting to this story.