U.S. stocks exhibited a mixed performance during Wednesday's early trading session. The technology sector once again came under selling pressure, with Advanced Micro Devices (AMD) plunging more than 14%. The latest labor market data revealed that U.S. private sector employment increased by a mere 22,000 in January, significantly missing market expectations.
The Dow Jones Industrial Average rose by 67.87 points, or 0.14%, to 49,308.86; the Nasdaq Composite fell by 220.52 points, or 0.95%, to 23,034.67; and the S&P 500 dropped 22.84 points, or 0.33%, to 6,894.97. Technology stocks faced another wave of selling. Shares of AMD plummeted after the company's first-quarter performance outlook failed to meet the expectations of some analysts. Influenced by AMD's results, other chip sector stocks, including Broadcom and Micron Technology, also declined in tandem.
Chipotle Mexican Grill's stock also came under pressure after the restaurant chain reported a decline in customer traffic for the fourth consecutive quarter and projected flat comparable store sales growth for 2026. Novo Nordisk's share price fell 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, anticipated that performance could decline further before a potential rebound.
Meanwhile, ADP released its monthly data on private sector job growth for January on Wednesday, showing the addition of only 22,000 positions for the month. This fell short of the 45,000 increase forecast by economists surveyed by Dow Jones. This data indicates that the U.S. labor market in January continued the pattern of near-stagnation seen recently, characterized by low hiring and low firing.
The report from Automatic Data Processing (ADP) released on Wednesday showed the U.S. labor market was nearly stagnant in January, with job additions 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 seen a negative change. This result was not only lower than the downwardly revised 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 continued the state of 2025: a "low-hire, low-fire" employment environment characterized by weak hiring and limited layoffs. This situation is unlikely to alleviate the concerns of Federal Reserve policymakers that the economy still requires more support. This data typically precedes the Labor Department's non-farm payrolls report. However, due to a partial government shutdown, the Bureau of Labor Statistics announced on Monday that it would not release the non-farm data this week.
Emily Liddell, Deputy Commissioner of the U.S. Bureau of Labor Statistics, stated in a release: "The Employment Situation report for January 2026 will not be released as scheduled on Friday, February 6, 2026. The report will be rescheduled for release after government funding is restored." It remains unclear whether the Commerce Department will face delays in reports due to the impasse in Washington. This decision comes during a week packed with economic data releases, which was originally set to culminate with the non-farm payrolls report, also known as the unemployment situation report.
Markets had previously anticipated that the January non-farm payrolls report would show an addition of 55,000 jobs, with the unemployment rate holding steady at 4.4%. U.S. stocks closed lower on Tuesday, primarily driven by investors shifting away from high-risk growth stocks and moving towards cyclical stocks like Walmart. On that day, the S&P 500 fell approximately 0.8%, and the Nasdaq dropped 1.4%. The Dow Jones declined nearly 167 points (a 0.3% drop), after having hit a record high intraday.
The technology sector was the worst-performing group in the S&P 500 that day, falling over 2%. Stocks such as Nvidia, Microsoft, prominent AI infrastructure player Broadcom, Oracle, and Micron Technology generally closed lower. Jim Reid, Head of Global Fundamental Credit Strategy and Thematic Research at Deutsche Bank, commented: "Yesterday marked a sharp acceleration of a recent trend, meaning 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 winners in AI is unlikely to be answered in 2026, the market has clearly shifted in recent months from AI frenzy towards more nuanced company differentiation, with growing concerns about its disruptive impact on existing business models." Commenting on Tuesday's market decline, Joe Tanious, Chief Investment Strategist at Northern Trust Asset Management for North America, stated: "I believe there are multiple conflicting forces hitting the market simultaneously. On the other hand, I still believe the underlying fundamentals remain solid."
He said: "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 small catalyst is enough to unsettle the market and trigger the kind of selling we are currently seeing." A busy week for corporate earnings is underway, with Alphabet scheduled to report on Wednesday and Amazon expected to release its results on Thursday. Over 100 companies in the S&P 500 are set to report earnings this week.
Comments