By Hibah Yousuf, staff reporterJanuary 30, 2011: 8:24 AM ET
NEW YORK (CNNMoney) -- Stocks have been on a run since late August, and investment experts have been warning that the market is due for a short-term correction. With political unrest in the Arab world and the January jobs report taking center stage this week, the catalyst for a downward move may finally be here.
After rising to the highest levels since the summer of 2008 and crossing key psychological milestones -- the Dow topped 12,000 and the S&P hit 1,300 last week -- stocks took a hard hit Friday as investors watched anti-government demonstrations unfold in Egypt.
"We are worried about the developing geopolitical risk in the Middle East and North Africa," said David Kotok, chief investment officer at Cumberland Advisors. "We do not know where it will spread, nor do we know how it will run its course."
Protests in Tunisia, Algeria, Jordan, Yemen, and now Egypt, could continue to have a domino effect across the Arab world. As such, Kotok said he raised the cash positions in his portfolios at the end last week to the highest levels since 2008.
While political instability alone will likely upset the market, the wounds could be deeper if the turmoil spills over to major oil producers like Iran. Amid the uncertainty, oil prices spiked more than 4% last Friday.
Tensions rise on surging food prices
Jobs report: The week's most closely-watched reading on employment is due Friday. Employers are expected to have added 150,000 jobs in January after adding 103,000 jobs in December.
Despite the gains, the unemployment rate is expected to tick back up to 9.6% as some of the unemployed return to the labor force to search for jobs. The unemployment rate dropped to 9.4% in December.
Kim Caughey, senior equity analyst at Fort Pitt Capital Group, said the market can't continue to rally "without a sustained recovery, which means we need to get people back to work."
Last week, unemployment claims jumped back above 450,000, signaling that the roller coaster ride for the job market has not yet come to an end.
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