After failing to sustain an initial move to the upside, stocks quickly gave back ground in early trading on Wednesday and showed a lack of direction over the remainder of the session.
The major averages spent the day bouncing back and forth across the unchanged line before eventually closing modestly lower.
The Dow slipped 66.74 points or 0.1 percent to 50,1212.40, the Nasdaq dipped 36.01 points or 0.2 percent to 23,066.47 and the S&P 500 (SPI:SP500) edged down 0.34 points or less than a tenth of a percent to 6,941.47.
The initial strength on Wall Street came following the release of a closely watched Labor Department report showing employment in the U.S. increased by much more than expected in the month of January.
The Labor Department said non-farm payroll employment jumped by 130,000 jobs in January after rising by a downwardly revised 48,000 jobs in December.
Economists had expected employment to climb by 70,000 jobs compared to the addition of 50,000 jobs originally reported for the previous month.
The report also said the unemployment rate edged down to 4.3 percent in January from 4.4 percent in December, while economists had expected the unemployment rate to remain unchanged.
However, the report also showed a significant downward revision to job growth in 2025, with the increase in employment revised to 181,000 jobs from 584,000 jobs.
“One big takeaway from today’s nonfarm payroll report is the 2025 average monthly gain in payrolls was 15,000,” said Jeffrey Roach, Chief Economist for LPL Financial. “Labor demand came to a standstill last year.”
The stronger-than-expected job growth in January may also have reduced the likelihood of near-term interest rate cuts by the Federal Reserve, offsetting the initial positive reaction.
On Friday, the Labor Department is scheduled to release a separate report on consumer price inflation that may shed additional light on the outlook for rates.
Sector News
Despite the lackluster performance by the broader markets, energy stocks moved sharply higher along with the price of crude oil, with the Philadelphia Oil Service Index and the NYSE Arca Oil Index surging by 3.1 percent and 2.8 percent, respectively.
A notable increase by the price of gold also contributed to substantial strength among gold stocks, as reflected by the 2.6 percent jump by the NYSE Arca Gold Bugs Index.
Semiconductor, computer hardware and natural gas stocks also saw considerable strength, while airline, software and brokerage stocks showed significant moves to the downside.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Wednesday, with the Japanese markets closed for a holiday. China’s Shanghai Composite Index inched up by 0.1 percent, while Hong Kong’s Hang Seng Index rose by 0.3 percent.
Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.’s FTSE 100 Index jumped by 1.1 percent, the French CAC 40 Index dipped by 0.2 percent and the German DAX Index fell by 0.5 percent.
In the bond market, treasuries moved to the downside in reaction to the monthly jobs data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 2.5 basis points to 4.172 percent.
Looking Ahead
Trading on Thursday may be impacted by reaction to the latest U.S. economic data, including reports on weekly jobless claims and existing home sales.
SOURCE: RTTNEWS