Alcoa reported earnings after Wednesday’s market close, kicking off the earnings season for the final 2014 quarter. Thanks to strong automotive demand and lower energy costs, the aluminum maker beat the Street’s revenue and earnings expectations by sizeable margins, seemingly setting a positive tone for the corporations to report in the ensuing weeks.

Despite opening firmly in the green, however, U.S. stock indexes could not hold their early gains. Thursday marked the first time since August of 2011 that the S&P 500 had reached an intraday peak of 1.4 percent or more but closed in the red. Our indicator turned bearish last week and continues to suggest downside in the near term.

Again, major market declines generally do not occur against a backdrop of cheap oil, but with the domestic energy sector playing a larger role than ever before in the U.S. economy, a period of depressed oil prices could shake business and investor confidence.

Analysts expect the fourth quarter profits of S&P 500 companies to grow just 2 percent; in October, they had predicted 8.1 percent growth. Market watchers reduced their earnings expectations across almost every S&P 500 sector, with especially heavy cuts to energy companies—which as a group are expected to report a 20 percent earnings decline. West Texas Intermediate, the proxy for domestic oil, fell more than 40 percent in the fourth quarter.

Although cheaper fuel costs help consumers and businesses, the reduction in capital spending by energy companies and the companies hurt by the energy investment cuts are negatives for growth.

So far, according to the Labor Department’s official numbers, the labor market hasn’t felt the impact of the oil slump yet: Last Friday, the Bureau of Labor Statistics said that 252,000 non-farm jobs were added in December. The unemployment rate fell to the lowest mark since the summer of 2008 at 5.6 percent.

Yet wage gains continue to be fleeting. Compared to November, U.S. workers made on average 5 cents less per hour worked and, compared to one year ago, only 1.7 percent more. The lack of pay increases limits American consumer spending growth—household spending accounts for some 70 percent of U.S. GDP. Fortunately, although Americans do not make much more on average, their savings at the pump thanks to incredible declines in the price of oil in the last six months means that they do have a little more to discretionally spend elsewhere.

It would be foolish to expect oil to be so cheap for long, however.

Also consider that the labor participation rate fell further in December to 62.7 percent, a 37-year low. When the pool of potential workers shrinks significantly, the unemployment rate can go down sharply even without a great amount of job creation. In other words, due to fewer Americans working or looking for work, the headline jobless rate implies a rosier picture of the labor market than the reality.

Although the seemingly excellent job report sparked some whispers that the Federal Reserve may accelerate its plan to raise interest rates, we continue to expect Janet Yellen and company to wait as long as possible before tightening. As noted above, the job market really isn’t strongly recovering, and in light of no inflationary pressure and weak foreign economies, the Fed need not jump the gun. 

The minutes, released last week, from the December Federal Open Market Committee (FOMC) meeting, confirmed that the committee members would likely not raise rates before their scheduled late-April meeting. And Fed officials such as Atlanta Federal Reserve Bank President Dennis Lockhart (who has a vote on the FOMC this year) have commented that today’s report is no reason to alter the timing.