The Dow Jones Industrial Average slipped on Wednesday and snapped a three-day win streak after the better-than-expected January jobs report failed to spark a sustainable advance.
The blue-chip index lost 66.74 points, or 0.13%, and closed at 50,121.40. The S&P 500 inched down less than a point to 6,941.47. The Nasdaq Composite dropped 0.16% to end at 23,066.47.
The Bureau of Labor Statistics' January nonfarm payrolls report — which had been delayed due to a partial government shutdown that ended on Feb. 3 — showed job growth of 130,000 last month. Economists polled by Dow Jones had called for a gain of 55,000. The latest figure also marked a sizable increase from December, which was downwardly revised to 48,000.
The unemployment rate also landed at 4.3%, a bit below the Dow Jones forecast for 4.4%.
While the report showed the strongest job gains in more than a year, areas of growth remained concentrated in just a few sectors, predominantly health care-related, which added 124,000 total positions. That was double the normal growth from 2025. Moreover, there is the continuing specter of downward revisions over the labor market, particularly after every month in 2025 saw adjustments lower. With benchmark annual revisions combined with monthly moves through the year, average monthly job growth last year was just 15,000.
"This is generally a good sign, as you'd expect, but we are certainly not out of the woods yet with respect to the labor market. 'Moving in the right direction' would be a better description. The unemployment rate is gradually improving, but there are still plenty of signs that the labor market remains exceedingly weak," Rick Wedell, CIO at RFG Advisory, said, citing a low quit rate as one example.
"In this environment, it is clear that we still have a long way to go before the labor market can be considered 'solid,'" he added.
Treasury yields had initially jumped on the heels of the report as it at first fueled investor optimism that the economy was on firm footing. At session highs, the Dow was up more than 300 points, or 0.6%, while the S&P 500 gained 0.7% and the Nasdaq jumped 0.9%. However, odds for interest rate cuts from the Federal Reserve were reduced, which could have thrown a wrench into that enthusiasm.
The jobs report follows weaker-than-expected consumer data released on Tuesday. That report showed that consumer spending in December was flat, missing the 0.4% monthly gain expected from economists polled by Dow Jones.
"After a long period of prognosticators offering a tepid outlook for the economy based on a weakening labor market, this print provides a solid datapoint on the side of robust economic growth, an improving labor market and wage growth that can support consumer spending," said Brad Smith, portfolio manager at Janus Henderson Investors. "The Fed will take this point into its calculus when it makes its decision next month on whether to hold rates steady. With its wait-and-see data dependent stance, this will surely put the balance towards a hold."
Software stocks, which were a key driver of last week's rout amid fears of disruption from artificial intelligence, came under pressure yet again Wednesday. Salesforce was down 4%, while ServiceNow fell 5%. The iShares Expanded Tech-Software Sector ETF (IGV) dropped more than 2%, putting it nearly 30% below its 52-week high. The fund entered bear market territory last month.
Conversely, shares of stocks that would benefit from an accelerating economy gained, as well as those involved in the buildout of AI data centers. Shares of digital infrastructure provider Vertiv surged 24% after the company posted a fourth-quarter earnings beat and issued a strong 2026 outlook. Others such as Caterpillar, GE Vernova and Eaton were all higher in the session as well.
— CNBC's Jeff Cox contributed reporting
