NEW YORK — 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 began flipping between gains and losses. By 11:30 a.m. Eastern time, it was back to nearly unchanged. The Dow Jones Industrial Average dropped 97 points, or 0.2%, and the Nasdaq composite fell 0.3%. Both also erased early gains.
Treasury yields, meanwhile, remained higher 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 from 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 some of the bigger 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 3.3%. Smurfit Westrock jumped 9.9% even though the packaging company reported a weaker profit for the latest quarter than analysts expected. It gave financial targets for the next five years that some analysts found encouraging.
But on the other hand for the broad stock market, the stronger-than-expected jobs data could also keep the Federal Reserve on hold when it comes to cuts to interest rates. And higher rates can drag on prices for stocks and all kinds of other investments.
After Wednesday's report showed a tick down for the U.S. unemployment rate, traders pushed back their bets for when the Fed could begin cutting interest rates again, according to data from CME Group. Most are still betting on at least two cuts for 2026.
If Wednesday's jobs report had shown a rise in the unemployment rate or other worsening for the job market, that could have pushed the Fed to resume its cuts more quickly.
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, and it will likely be another big influence on the Fed’s plans.
After the jobs report, the yield on the 10-year Treasury was holding at 4.16%, where it was late Tuesday. The two-year Treasury yield, which moves more closely with expectations for Fed moves, climbed to 3.50% 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.
The overall jobs report nevertheless looked to be an encouraging signal for 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 8.8% 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 11.3% 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.
Crypto prices have been plunging recently, and bitcoin's price fell toward $66,000 Wednesday. It's lost close to half its value since setting a record in October.
Kraft Heinz erased an early loss and rose 0.4% 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.
The United Kingdom’s FTSE 100 gained 1.3%, and South Korea’s Kospi rose 1% for two of the bigger moves.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
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