In ordinary economic times — that is, the past 20 years or so of low inflation, moderate unemployment and slow growth — January’s employment numbers would have been a cause of celebration. Regardless of the angle you look at, the report gleamed: A 517,000 increase in employment — almost three times what analysts expected. An unemployment rate of 3.4% — the lowest in more than 50 years. An hourly wage growth of 0.3% — solid, but still moderating from the rest of the year. 

Yet markets fell on the news. On Friday, the S&P 500 declined 1.04% to 4,136.48, the Nasdaq Composite lost its red-hot streak and fell 1.59%, and the Dow Jones Industrial Average slipped 0.38%. True, the indexes may have been reacting to earnings: Apple, Alphabet and Amazon, which in combination have a market capitalization of nearly $5 trillion, turned in fourth-quarter results with more misses than hits. Investors’ disappointment was reflected in the companies’ share prices (though it has to be noted that Apple’s shares actually gained 2% after experiencing an early loss), which, in turn, reverberated through the indexes.

Foremost on investors’ minds, however, must surely be how the job report will affect the Federal Reserve’s interest rate trajectory. Central bankers have repeatedly emphasized that they’re looking at economic data to determine how far to take hikes. The question is: Which set of data are they prioritizing? We know that inflation, consumption and manufacturing figures have fallen in December. But January’s job report paints a picture of an incredibly robust labor market that might keep inflation persistently high, especially in the services sector, which saw the most gains last month. Fed Chair Jerome Powell has indicated he’s focusing on the labor market, which he described in his Wednesday post-meeting news conference as “out of balance.” Investors betting on a rate pause or pivot might be forced by the Fed to find a new equilibrium too.