(Adds Venezuela weekend events to SCHEDULED COLUMN issued on January 2)

S&P 500 falls at year-end but finishes 2025 with 16% gain

Employment data headlines economic reports in coming days

Q4 earnings season, inflation data also loom in busy January

NEW YORK, Jan 2 (Reuters) – The first full trading week of the new year could shake the U.S. stock market out of its winter holiday slumber as investors parse the rapid developments in Venezuela while monthly jobs data looms.

Stocks slid in the final session of 2025, with the benchmark S&P 500 falling into a monthly loss for December. But the index still climbed more than 16% in 2025, its third straight year of double-digit percentage gains, while the Cboe Volatility index was just above its lows for the year.

Trading volumes were thin at the end of 2025, but the new year could get off to an eventful start.

In dramatic weekend events, U.S. President Donald Trump said on Saturday he was putting Venezuela under temporary American control after the United States captured President Nicolas Maduro.

Investors said such developments

in the oil-rich country raised the concerns around geopolitical risks, and that any oil price volatility would ripple through assets.

Investors also await more drama with a U.S. Supreme Court decision looming on Trump’s tariffs, along with his choice of a new Federal Reserve chair, and U.S. corporate earnings season is around the corner.

In the first session of 2026 on Friday, the S&P 500 posted a slim gain as semiconductor shares rallied.

Though the benchmark is near record highs, it is hovering around its late October level, said Matthew Maley, chief market strategist at Miller Tabak.

“The market is looking for direction,” Maley said. “We break out of these ranges and that’s going to give people either a lot of confidence or a lot of concern, depending on which way it breaks.”

JOBS DATA COULD SEND RATE SIGNALS

The employment data due on January 9 could provide a jolt either way. Concerns over weakness in the labor market prompted the Fed to lower interest rates at each of its last three meetings of 2025, as the U.S. central bank juggles its goals of full employment and contained inflation.

Lower rates have supported equities, but the extent of further cuts in 2026 is unclear. Fed officials were divided over the path for monetary policy at the most recent meeting in December. Inflation remains above the Fed’s 2% annual target.

With the benchmark rate at 3.5% to 3.75%, Fed funds futures suggest little chance of a cut at the next meeting in late January, but nearly a 50% chance of a quarter-point reduction in March.

“Softening in the labor market has really given the Fed good cover to change their outlook about reducing rates,” said Eric Kuby, chief investment officer at North Star Investment Management in Chicago.

At the same time, investors are wary that an overly weak report could signal more economic concern than markets now anticipate.

Employment for December is expected to have climbed by 55,000 jobs, a Reuters poll showed. Payrolls rose by 64,000 in November, but unemployment of 4.6% was at a more than four-year high.

“If (employment) starts turning down in any kind of meaningful way, that’s going to signal that the recession is a lot closer than people think,” Maley said.

INFLATION, Q4 EARNINGS ALSO LOOM

Other data next week includes manufacturing and services sector activity, along with job openings and other labor market data. Economic releases are returning to more normal schedules after a 43-day government shutdown that delayed or canceled many key reports.

A closely watched report on inflation trends, the monthly U.S. consumer price index, is due out on January 13.

“Anything that has to do with underlying economic activity and inflation is really going to catch the market’s attention,” said Scott Wren, senior global market strategist at Wells Fargo Investment Institute.

A backdrop of modest economic growth and moderating inflation is “a good environment for stocks and for risk assets in general,” he added.

Investors will be preparing for the fourth-quarter earnings season, with results from JPMorgan due on January 13, among other major bank reports that week.

With stocks trading at historically lofty valuations, investors are banking on strong earnings growth. Overall S&P 500 company earnings are expected to have climbed 13% in 2025, with another rise of 15.5% in 2026, LSEG IBES data shows.

“To make an investment case for the S&P 500 at current levels, one must believe in some combination of good and very good earnings growth and continued investor confidence in economic conditions and macro policy,” Nicholas Colas, co-founder of DataTrek Research, said in a research note. (Reporting by Lewis Krauskopf; Editing by Megan Davies, David Gregorio and Clarence Fernandez)