U.S. stocks closed slightly lower as investors reacted to stronger-than-expected labor-market data and ongoing concerns surrounding artificial intelligence, which continued to pressure financial and software shares.
Major indexes traded mixed throughout the session before ending modestly in the red. The Dow Jones Industrial Average snapped a three-day record streak, slipping 0.1%. The Nasdaq Composite declined 0.2%, while the S&P 500 edged down less than 0.1%. Treasury yields moved higher following January’s jobs report, reinforcing expectations that the Federal Reserve will keep interest rates unchanged for now.
The employment report, briefly delayed due to the government shutdown, showed the economy added 130,000 jobs last month — more than double forecasts. The unemployment rate unexpectedly fell to 4.3%.
Despite the stronger monthly gain, revised data revealed the economy added just 181,000 jobs in total last year, with much of the growth concentrated in the healthcare sector.
AI-related uncertainty continued to ripple through markets. Shares of major banks including Bank of America, JPMorgan, and Citigroup fell more than 2%, while brokerage firms such as Charles Schwab and Robinhood extended their declines. Software giants Salesforce and Intuit each dropped over 4%.
On the corporate front, earnings reports continued to roll in. Humana was among the companies reporting results, while Kraft Heinz shares rose 0.4% after the company announced it would pause plans for a proposed split.
Meanwhile, Brent crude climbed 0.9% to $69.40 per barrel after reports that U.S. officials are considering seizing tankers transporting Iranian oil.
Frequently Asked Questions
Why did stocks fall despite strong jobs data?
Stronger-than-expected job growth pushed Treasury yields higher, reinforcing expectations that the Federal Reserve will keep interest rates elevated for longer — which can pressure stock valuations.
What does the drop in unemployment to 4.3% mean for markets?
Lower unemployment signals economic resilience, but it also reduces the urgency for the Fed to cut rates, potentially keeping borrowing costs higher.
Why are AI concerns affecting bank and software stocks?
Investors are reassessing AI-driven growth expectations and valuations. Financial and tech stocks, which previously benefited from AI optimism, are now seeing profit-taking and repricing.
How do rising Treasury yields impact equities?
Higher yields make bonds more attractive relative to stocks and increase discount rates, which can lower equity valuations — especially in growth sectors.
What should investors watch next?
Upcoming inflation data, Federal Reserve commentary, and earnings reports will be key drivers for market direction in the near term.
