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Financial Markets 02/11 09:37
NEW YORK (AP) -- U.S. stocks are feeling both the upside and downside
Wednesday of a surprisingly strong report that said the nation's unemployment
rate improved last month.
After initially rising toward its all-time high, the S&P 500 erased its
early modest gain and fell 0.1%. The Dow Jones Industrial Average was down 82
points, or 0.2%, as of 10:15 a.m. Eastern time, and the Nasdaq composite was
0.4% lower. Both also flipped after initially rising.
Treasury yields, meanwhile, held onto their gains in the bond market after
the Labor Department said U.S. employers added 130,000 jobs to their payrolls
last month, more than the 75,000 that economists expected. That helped calm
worries that had heightened a day earlier, when a discouraging report suggested
spending by U.S. households, the main engine of the economy, may be stalling.
On one hand, the strong data on jobs raises hopes that the U.S. economy can
remain solid and keep driving big profits for companies. Stocks in the energy
and raw-material industries jumped to the biggest gains in the S&P 500, for
example, and their profits tend to be closely tied to the health of the economy.
Exxon Mobil climbed 2.2%. Smurfit Westrock jumped nearly 11% even though the
packaging company reported a weaker profit for the latest quarter than analysts
expected. It gave forecasts for financial results through 2030 that some
analysts found encouraging.
But on the other hand for the broad stock market, the strong jobs data could
also keep the Federal Reserve on hold when it comes to interest rates. And
higher rates can drag on prices for stocks and all kinds of other investments.
After the U.S. unemployment rate unexpectedly improved, traders pushed back
their bets for when the Fed could begin cutting interest rates again, though
most are still betting on at least two cuts for 2026, according to data from
CME Group.
If Wednesday's jobs report had shown further weakening, that could have
pushed the Fed to resume its cuts more quickly. That's because lower rates can
give the economy a boost, though they can also worsen inflation. The next
monthly update on inflation at the U.S. consumer level is arriving on Friday.
After the jobs report, the yield on the 10-year Treasury rose to 4.17% from
4.16% late Tuesday. The two-year Treasury yield, which more closely tracks
expectations for moves by the Federal Reserve, added more. It climbed to 3.51%
from 3.45%.
To be sure, all is still not perfectly clear for the U.S. economy.
Wednesday's report included major revisions, which said employers added just
181,000 jobs for all of last year. That's less than a third of the previously
reported 584,000 and the weakest showing for a year since 2020, when COVID-19
shut down the economy.
"We all knew there would be downward revisions, but these were better than
expected," Brian Jacobsen, chief economic strategist at Annex Wealth
Management, said of the markdowns for 2025.
On Wall Street, Moderna dropped 11.9% after saying the U.S. Food and Drug
Administration is refusing to consider its application for a new flu vaccine
made with Nobel Prize-winning mRNA technology. It's the latest sign of the
FDA's heightened scrutiny of vaccines under Health Secretary Robert F. Kennedy
Jr.
Robinhood Markets fell 12.7% even though the trading and investment app
reported a stronger profit for the latest quarter than analysts expected. Its
revenue fell short of forecasts, and analysts highlighted Robinhood's forecast
for expenses in 2026, along with concerns about how long a slowdown in crypto
trading will last.
Kraft Heinz erased an early loss and was flat after CEO Steve Cahillane said
he's pausing the company's planned split into two businesses as he tries to
return it to profitable growth. He also announced a $600 million investment
across marketing, sales and research and development.
In stock markets abroad, indexes rose across much of Asia and Europe.
South Korea's Kospi rose 1%, and the United Kingdom's FTSE 100 gained 1% for
two of the bigger moves.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
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