U.S. stocks closed lower on Wednesday, even after a stronger-than-expected jobs report, which heightened speculation about the Federal Reserve’s next policy move. The Nasdaq Composite, the S&P 500, and the Dow all ended in negative territory.
The Dow Jones Industrial Average (DJI) fell 0.1%, or 66.74 points, to close at 50,121.40. Fourteen components of the 30-stock index ended in negative territory, and 16 ended in positive territory. The major loser of the Dow was International Business Machines Corporation (IBM). The stock price of this integrated solutions provider fell 6.5%. IBM currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank stocks here.
The tech-heavy Nasdaq Composite declined 0.2%, or 36.01 points, to finish at 23,066.47 points.
The S&P 500 lost 0.01%, to end at 6,941.47. Out of 11 broad sectors of the broad-market index, three ended in negative territory while eight ended in the positive zone. The Financials Select Sector SPDR (XLF), the Communication Services Select Sector SPDR (XLC) and the Consumer Discretionary Select Sector SPDR (XLY) fell 1.5%, 1.3%, and 0.6%, respectively, while the Energy Select Sector SPDR (XLE) rose 2.6%.
The fear gauge, the CBOE Volatility Index (VIX), decreased by 0.8% to 17.65. A total of 11.17 billion shares were traded on Wednesday, lower than the last 20-session average of 15.8 billion. The S&P 500 posted 99 new 52-week highs and 24 new lows, and the Nasdaq Composite recorded 123 new highs and 232 new lows.
Solid Jobs Report Sparks Rate-Cut Debate
On Wednesday, the Labor Department reported that the nonfarm payrolls increased by 130,000 in January, surpassing analysts’ expectations of a 53,000 increase. However, the unemployment rate edged down to 4.3% in January from 4.4% in the prior month.
Former President Donald Trump welcomed the job data in a social media post, renewing his call for rate cuts. He stated, “GREAT JOBS NUMBERS, FAR GREATER THAN EXPECTED!”
According to CME Group’s Fed Watch tool, markets are pricing in a 93.6% probability of a 25-basis-point rate cut in June. Additional economic data due later this week may provide further clarity on the Federal Reserve’s policy outlook.
Economic Data
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 8.5 million barrels for the week ended Feb. 6.
