Wall Street Slips as Strong Jobs Report Dims Hopes for Early Fed Rate Cuts

U.S. stocks eased after stronger-than-expected January payroll growth reduced expectations for near-term rate cuts, while energy and gold stocks surged. Treasury yields rose as the 10-year note touched 4.17%.

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 edged down 0.34 points or less than a tenth of a percent to 6,941.47.

Wall Street opened stronger on Thursday after the Labor Department reported that U.S. non-farm payrolls surged by 130,000 in January, far exceeding expectations of 70,000. Decembers gain was revised down to 48,000 from 50,000, while the unemployment rate edged lower to 4.3% from 4.4%, defying forecasts for no change.

 

However, the Department also made a large downward revision to 2025 job growth, cutting the annual total to 181,000 from 584,000. LPL Financials Chief Economist Jeffrey Roach noted that labor demand had nearly stalled last year, with an average monthly gain of just 15,000 jobs. The stronger-than-expected January figures now make near-term Fed rate cuts less likely ahead of Fridays key inflation report.

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. Gold prices notably increased contributing 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.

Asia-Pacific stocks moved mostly higher, 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. 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 bps to 4.17 percent.

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