S&P 500 and Nasdaq 100: Mixed Jobs Data Sparks Rate Cut Uncertainty

S&P 500 Higher After Mixed Jobs Report, Heads for Weekly Gain

Stocks were mostly higher on Friday as traders assessed the latest employment data and its impact on interest rates.

A mixed jobs report for January kept markets in check. While only 143,000 jobs were added—falling short of expectations—the unemployment rate unexpectedly dropped to 4% from 4.1%. Additionally, revisions to December and November showed stronger hiring than previously reported. Average hourly earnings also came in higher than expected, stoking inflation concerns.

The 10-year Treasury yield climbed above 4.47% following the report, pressuring equities as traders reconsidered the Federal Reserve’s rate path.

Will the Fed Stay on Hold?

Market participants largely interpreted the employment data as reason for the Fed to remain patient on rate cuts. Bryce Doty, senior portfolio manager at Sit Investment Associates, noted that while the jobs report wasn’t particularly strong, the combination of lower unemployment and rising wages signals a resilient labor market. As a result, he expects bond yields to drift higher as investors digest the data.

With the Fed already signaling a cautious stance, traders are now pricing in a lower probability of imminent rate cuts, which could keep pressure on high-growth sectors.

Amazon’s Weak Outlook Pressures Sentiment

Amazon shares fell 2% after the company’s first-quarter revenue growth forecast disappointed investors. The e-commerce giant projected sales growth between 5% and 9%, its slowest expansion on record. Despite beating estimates for both earnings and revenue in the fourth quarter, the muted guidance overshadowed the results, weighing on overall market sentiment.

Major Indexes on Track for Weekly Gains

Despite Friday’s muted action, the major indexes are set to close the week with modest gains. The S&P 500 is on pace for a 0.7% advance, while the Nasdaq is tracking for a 0.8% rise. The Dow, lagging behind, is up about 0.5% for the week.

This comes after stocks rebounded from Monday’s sell-off, which was triggered by President Donald Trump’s surprise announcement of 10% tariffs on China. His initial proposal of 25% levies on Canada and Mexico was later paused, but uncertainty around trade policy remains a concern.

What’s Next for Markets?

Investors will be closely watching for additional signals on inflation and Fed policy. Next week’s CPI report will be a key indicator for the market, influencing rate expectations and overall sentiment. With the labor market still showing strength, any upside surprise in inflation data could further delay rate cut expectations, adding volatility to equities.

Traders should also monitor corporate earnings and geopolitical developments as key factors that could drive market direction in the coming weeks.

More Information in our Economic Calendar.