U.S. stock markets concluded Wednesday's trading session with a mixed performance. The S&P 500 index registered a decline for the second day in a row, while weakness in shares of Advanced Micro Devices weighed on the Nasdaq Composite. The latest labor market data revealed that U.S. private sector employment increased by a mere 22,000 jobs in January, falling significantly short of market expectations.
The Dow Jones Industrial Average advanced by 260.31 points, or 0.53%, to close at 49,501.30. Conversely, the Nasdaq Composite dropped 350.61 points, or 1.51%, finishing at 22,904.58. The S&P 500 index declined by 35.09 points, or 0.51%, settling at 6,882.72. Bitcoin fell by 3%, having earlier dropped below the $73,000 level, further intensifying market risk-off sentiment. Technology stocks faced another wave of selling pressure. Shares of Advanced Micro Devices experienced a sharp decline after the company issued a first-quarter revenue forecast that failed to meet the expectations of some analysts. Addressing the financial performance, the company's CEO, Lisa Su, explained to media on Wednesday that demand had grown in recent months, noting, "The pace of AI development has far exceeded my expectations." Influenced by AMD's results, other chip sector stocks, including Broadcom and Micron Technology, also moved lower. Shares of Novo Nordisk declined after the pharmaceutical giant, while pre-releasing its 2026 forecast on Tuesday evening, indicated that a near-term recovery was unlikely. The company's CEO, Mike Doustdar, projected that performance could decline further before potentially rebounding. Scott Welch, Chief Investment Officer at Certuity, pointed out, "Since the end of last year, the market has begun to differentiate between the winners and losers in the artificial intelligence space, and I believe this trend is continuing." Within the Dow Jones index, biopharmaceutical company Amgen emerged as a significant contributor to the index's strength. The company's fourth-quarter results surpassed expectations, propelling its stock price higher by 7%. Honeywell also contributed to the index's gains, with its shares rising over 1% as investors rotated away from technology stocks toward more value-oriented investments. Scott Welch interpreted the movement, stating, "This is just a natural sector rotation. Large-cap growth stocks have dominated for an extended period—value stocks have been persistently weak, small-cap stocks have been sold off, and international markets have been completely overlooked. Yet, in reality, international markets performed almost twice as well as the U.S. market last year." He added, "These shifts have been signaled for a while; I think we are just seeing the initial effects of the rotation now." Concurrently, ADP released its monthly report on private sector job growth for January, showing the addition of only 22,000 positions for the month. This figure fell below the 45,000-job increase forecast by economists surveyed by Dow Jones. This data indicated that the U.S. labor market in January continued a pattern of near-stagnation, characterized by low hiring and low firing. The report from Automatic Data Processing (ADP) released on Wednesday showed the U.S. labor market was almost at a standstill in January, with job creation falling short of already modest market expectations. The data revealed that the private sector added a mere 22,000 jobs in January. Had it not been for an unexpected addition of 74,000 jobs in the education and health services sector, overall employment would have contracted. This result was not only lower than the downwardly revised figure of 37,000 new jobs in December but also significantly missed the Dow Jones survey expectation of 45,000. This report suggests that the beginning of 2026 largely延续了 the state of 2025: a "low-hire, low-fire" employment environment characterized by weak hiring and limited layoffs. This situation is unlikely to alleviate concerns among Federal Reserve policymakers that the economy still requires more support. This data typically precedes the Bureau of Labor Statistics' non-farm payrolls report. However, due to a partial government shutdown, the U.S. Bureau of Labor Statistics has postponed the release of the January 2026 Employment Situation Report to February 11, from its originally scheduled date of this Friday, February 6, 2026. Market expectations prior to the delay were for the January non-farm payrolls report to show an addition of 55,000 jobs, with the unemployment rate holding steady at 4.4%. The U.S. Bureau of Labor Statistics has also rescheduled the release of the January Consumer Price Index (CPI) report to 8:30 a.m. ET on February 13. U.S. stocks closed lower on Tuesday, primarily driven by investors moving away from high-risk growth stocks and rotating into cyclical names like Walmart. On that day, the S&P 500 fell approximately 0.8%, and the Nasdaq Composite declined by 1.4%. The Dow Jones fell nearly 167 points (a 0.3% drop), despite having hit an intraday record high earlier in the session. The technology sector was the worst-performing group within the S&P 500 that day, sliding more than 2%. Stocks such as Nvidia, Microsoft, prominent AI infrastructure player Broadcom, Oracle, and Micron Technology broadly closed in negative territory. Jim Reid, Head of Global Fundamental Credit Strategy and Thematic Research at Deutsche Bank, stated, "Yesterday marked a sharp acceleration of a recent trend, implying that the nine worst-performing companies year-to-date in the S&P 500 are all in the software and related services sector, having now fallen 25% or more." He added, "While the question of the ultimate AI winners is unlikely to be answered in 2026, the market has clearly shifted in recent months from AI euphoria towards a more nuanced differentiation between companies, with growing concerns about its disruptive impact on existing business models." Commenting on Tuesday's market decline, Joe Tanious, Chief Investment Strategist for North America at Northern Trust Asset Management, said, "I believe there are multiple conflicting forces hitting the market simultaneously. On the other hand, I still believe the underlying fundamentals remain solid." He stated, "The market is now beginning to make finer distinctions about which companies it is willing to invest in. At the same time, we must not forget that after three years of market gains and double-digit returns, valuations have started to look somewhat stretched. At this point, just a little stimulus is enough to touch a nerve in the market, triggering the kind of selling pressure we are currently witnessing." A busy earnings week is underway, with Alphabet scheduled to report results on Wednesday and Amazon expected to release its earnings on Thursday. Over 100 companies in the S&P 500 index are set to report their earnings this week.
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