Wall Street Mixed After Strong January Jobs Report as Yields Rise
U.S. stock markets traded mixed on Wednesday as gains fueled by a strong January nonfarm payrolls report were offset by weakness in communication services stocks. Investors also adjusted expectations for Federal Reserve interest rate cuts following the robust labor data.
At 14:55 ET (19:55 GMT), the S&P 500 edged up 0.1% to 6,949.57 after rising as much as 0.7% earlier in the session. The Nasdaq Composite was flat at 23,101.59, while the Dow Jones Industrial Average slipped 0.1% to 50,135.17.
Although stock futures climbed ahead of the opening bell on the back of the jobs report, momentum faded quickly. Markets recalibrated rate cut expectations, pushing Treasury yields higher.
January Nonfarm Payrolls Beat Expectations
According to the U.S. Bureau of Labor Statistics, nonfarm payrolls increased by 130,000 in January 2026, well above forecasts of 66,000 and higher than December’s revised figure of 48,000.
The unemployment rate declined to 4.3%, down from 4.4% the previous month.
Eric Merlis, co-head of global markets at Citizens, described the report as a “blockbuster,” noting that the combination of a lower unemployment rate and limited wage pressure supports the Federal Reserve’s decision to keep rates steady in March.
However, analysts cautioned that the broader labor market picture remains mixed. Job growth for 2025 was revised sharply lower to 181,000 from 584,000, highlighting ongoing hiring challenges.
Rick Wedell, chief investment officer at RFG Advisory, said that while the data shows gradual improvement, the labor market remains fragile. He pointed to a low quit rate, longer job search times, and growing examples of workers paying recruiters to secure employment as signs of underlying weakness.
Fed Rate Cut Expectations Decline
The stronger jobs report reduced expectations for near-term Federal Reserve rate cuts. According to the CME FedWatch Tool, the probability of the Fed holding rates steady in March rose to 94%, up from 80% a day earlier. Odds of unchanged rates in April also increased.
In response, U.S. Treasury yields moved higher. The 10-year yield climbed 3 basis points to 4.173%, while the more rate-sensitive 2-year yield rose 6 basis points to 3.514%.
Kansas City Fed President Jeffrey Schmid reinforced a cautious policy stance, stating that inflation remains a bigger concern than the labor market. He indicated that maintaining somewhat restrictive monetary policy is appropriate while inflation remains closer to 3% than the Fed’s 2% target.
Corporate Movers: Robinhood, Lyft, and Ford
In corporate news, Robinhood Markets shares declined after the company reported weaker-than-expected revenue and user metrics. Lyft also fell following earnings that missed Wall Street forecasts.
Meanwhile, Ford Motor reported quarterly results below expectations due to electric vehicle-related charges and supply chain disruptions. However, stronger earnings guidance for 2026 helped support the stock.
Overall, markets reacted cautiously to the strong jobs data, with higher Treasury yields reflecting reduced expectations for Federal Reserve rate cuts.
