Bonds Recoil, Stocks Await Jobs

"The answer to whether or not weakness in autos is bleeding into the service sector is 'no,' " says Paulsen, citing the stronger-than-expected ISM services report Tuesday. "And if you can still have about 125,000 new jobs each month even with the housing downturn, the consumer isn't going away either."

Meanwhile, clues are rolling in to suggest the labor market will remain robust. Also, after the government's downward revision to wage inflation data earlier this week, it seems likely that employers might not shy away from hiring. Indeed, payroll services processor ADP, in connection with Macroeconomic Advisers, reported Wednesday that 158,000 jobs were added in November, in its national employment report.

Strategists note that the ADP report has had some conspicuous "misses" this year in terms of forecasting the government payroll data. But the report may be more accurate when taking into account the many revisions to payrolls over the past two months. In a perfect world, economists would tack on the ADP report to their estimate of new government jobs, as the ADP report calculates only private sector jobs.

"Such prints would be consistent with job gains at the top end of the ranges estimated by the Fed as being consistent with full, stable, employment," writes Mark Chandler, fixed-income strategist at RBC Capital Markets.