U.S. stocks edged lower on Wednesday after a stronger-than-expected January jobs report complicated the outlook for Federal Reserve rate cuts. The Dow Jones Industrial Average and S&P 500 hovered just below the flatline, while the Nasdaq Composite slipped into negative territory as investors reassessed how long interest rates may need to remain elevated.
Approximately 130,000 jobs were added in January, well above expectations, while the unemployment rate edged down to 4.3%. But sweeping downward revisions to 2025 payroll growth revealed the weakest annual hiring outside a recession in more than two decades, creating a mixed macro picture that left markets searching for direction.
Market Movers:
- Teradata (TDC) +35%: Shares surged after the company delivered a strong fourth-quarter earnings beat and issued upbeat full-year profit guidance that topped Wall Street expectations. Growth in recurring cloud revenue and improving cash flow reinforced confidence in its transition toward subscription-driven analytics.
- Cloudflare (NET) +11%: The stock jumped following robust revenue growth and forward guidance that came in ahead of consensus forecasts. Investors focused on accelerating enterprise demand and continued expansion of AI-related networking and security services.
- BETA Technologies (BETA) +13%: Shares rallied after a regulatory filing revealed Amazon had taken a meaningful ownership stake in the electric aviation company. The investment fueled optimism about commercialization timelines and potential logistics partnerships.
- Unity Software (U) -32%: Shares plunged after weak first-quarter guidance overshadowed an otherwise solid quarterly performance. Concerns about slowing growth in gaming and advertising tools weighed heavily on sentiment.
- Mattel (MAT) -27%: The toy maker slid after a profit miss driven by margin compression from discounting, inflation, and foreign-exchange pressures. Investors also reacted cautiously to a modest full-year outlook that signaled limited near-term recovery.
- Lyft (LYFT) -14%: Shares dropped despite record rider numbers as revenue fell short of expectations and forward EBITDA guidance disappointed. Rising insurance costs and competitive pricing pressures remain key overhangs.
Strong Labor Data Reshapes Fed Expectations
January’s hiring surprise pushed Treasury yields higher and reduced expectations for near-term rate cuts. While markets still anticipate easing later in the year, traders increasingly believe the Fed may hold policy steady through mid-year if economic resilience persists. At the same time, the sharp downward revisions to prior payroll data underscore slowing momentum beneath the surface. This tension between short-term strength and longer-term cooling continues to define the macro narrative driving equities in early 2026.
Earnings Season Adds to Market Uncertainty
Corporate results remain another key catalyst for sentiment. Investors are watching consumer-facing bellwethers and major technology firms for clues about spending trends and AI-driven capital investment. Mixed guidance across sectors — from autos and software to consumer goods — reflects an environment where growth persists but margins face pressure from costs, competition, and shifting demand patterns. That uneven backdrop has contributed to the market’s choppy trading in recent sessions.
Looking Ahead
Markets now turn toward upcoming inflation data and further labor-market signals for confirmation on the Fed’s next move. A continued balance between economic resilience and slowing growth will likely determine whether equities can resume their upward trend or remain range-bound. For investors, the near-term outlook hinges on a single question: Will strong data delay rate cuts long enough to challenge valuations — or simply confirm the durability of the expansion?
