The DJIA erased early gains and closed about 120 points lower, down roughly 0.2% near 50,010, after briefly moving back above 50,000. The S&P 500 fell 0.2% and the Nasdaq Composite dropped 0.5% as heavy selling in enterprise software stocks outweighed the initial reaction to the January NFP report.<\/p>\n
The BLS said the US added 130K jobs in January versus a Dow Jones estimate of 55K, the strongest payroll growth since December 2024. Unemployment dipped to 4.3% from 4.4%, U6 fell to 8.0%, average hourly earnings rose 0.4% month-on-month and 3.7% year-on-year, participation edged up to 62.5%, and the household survey showed a gain of 528K.<\/p>\n
Health care added 82K jobs, social assistance 42K, and construction 33K, while federal government employment fell by 34K. Final benchmark revisions cut payrolls by 898K for April 2024 to March 2025, reducing 2025 job growth from 584K to 181K and taking average monthly gains to below 40K; Powell previously cited about 60K per month.<\/p>\n
Kansas City Fed President Jeff Schmid reiterated a preference for modestly restrictive policy as inflation persists, and markets shifted to expect the next cut no earlier than July. CME FedWatch priced about a 33% chance of 50 basis points of cuts by year-end, with the fed funds rate at 3.50% to 3.75% after three quarter-point cuts in H2 2025.<\/p>\n
Software shares fell again: Salesforce nearly 4%, ServiceNow over 6%, Intuit more than 5%, and Oracle and Palantir over 2%, while the iShares Expanded Tech-Software Sector ETF slid 3.5%. The sector has lost more than $1 trillion in value since late January, while AI infrastructure names rose, including Vertiv up 17%, Caterpillar up 4%, Eaton up 4%, and GE Vernova up 1%.<\/p>\n
Other moves included T-Mobile down 5%, Robinhood down 10%, and Mattel down 30%.<\/p>\n
The market is sending conflicting messages, with a strong January jobs report being cancelled out by fears of a hawkish Federal Reserve. This kind of indecision often leads to higher volatility, making options strategies that benefit from big price swings more appealing. We should be prepared for choppy conditions, as the CBOE Volatility Index (VIX) could easily spike back toward the 20 level we saw during periods of uncertainty in 2024.<\/p>\n
The historic selloff in enterprise software is not a one-day event; it’s a structural shift driven by AI disruption fears. This trend is likely to continue, as the current drop in the software sector is drawing comparisons to the tech correction of 2022, when the sector fell over 30%. We should consider buying put options on software ETFs or individual names like ServiceNow to capitalize on further weakness.<\/p>\n
On the other hand, the rally in AI infrastructure and industrial companies like Vertiv and Caterpillar is being fueled by real earnings and strong forward guidance. This “picks and shovels” play on AI is where capital is flowing, creating a clear bullish trend. Using call option spreads on these winners allows us to participate in the upside while managing the high premiums that come with such strong momentum.<\/p>\n
This clear divergence between software and infrastructure creates a classic pairs trade opportunity. By going long a basket of AI infrastructure stocks and shorting a basket of enterprise software stocks, we can isolate this specific theme. This strategy hedges against overall market direction, profiting as long as this powerful rotation continues.<\/p>\n
The surprisingly strong jobs data, especially the 3.7% annual wage growth, gives the Fed cover to delay further rate cuts past the summer. Looking back, we remember how difficult it was to tame inflation through 2023 and 2024, and the Fed will be cautious about cutting rates too quickly now. The market pushing rate cut expectations from June to July seems appropriate, and this delay will likely continue to weigh on growth-oriented stocks.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Stocks slipped despite strong January jobs data; software selloff dragged indexes lower as rate-cut expectations shifted.<\/p>\n","protected":false},"author":62,"featured_media":16989,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-41619","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/41619","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=41619"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/41619\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16989"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=41619"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=41619"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=41619"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}