US January nonfarm payrolls were 130K versus a 70K consensus, nearly doubling expectations. After an early rise, the Nasdaq Composite fell 0.25% by lunchtime, while the Dow Jones and S&P 500 were broadly flat.<\/p>\n
January payroll growth improved from December\u2019s revised 48K, and the unemployment rate dipped 0.1 percentage points to 4.3%. Market pricing for the next US rate cut moved from June to July, and a Federal Reserve official pointed to keeping policy restrictive as inflation nears 3%.<\/p>\n
Several non-AI technology and related shares fell after earnings updates. Stocks mentioned included Robinhood (HOOD), Shopify (SHOP), Lyft (LYFT), Astera Labs (ALAB) and Unity Software (U).<\/p>\n
Astera Labs dropped 20%, with attention on future gross margins and a partnership with Amazon (AMZN). Unity fell 30% on its revenue guidance, while Robinhood slid 13% after missing quarterly revenue.<\/p>\n
Centrus Energy (LEU) fell 19% after missing quarterly expectations. Shopify dropped 13% after forecasting Q1 free cash flow in the \u201clow to mid-teens\u201d, versus a 17% margin expected by Wall Street.<\/p>\n
With the January jobs report coming in strong, our expectations for a Federal Reserve rate cut have been pushed from June to July. The market reflected this immediately, with the 2-year Treasury yield jumping 15 basis points to 4.55% as traders priced in higher rates for longer. This suggests traders should consider strategies that benefit from this delay, such as buying puts on interest rate sensitive bond ETFs.<\/p>\n
We are seeing a clear and “violent” split in the technology sector, where non-AI companies are being punished while AI-centric firms hold up. This rotation is reminiscent of the valuation reset we witnessed back in 2022, creating opportunities for pairs trades. Consider buying calls on a basket of AI leaders while simultaneously buying puts on ETFs that track traditional software, like the iShares Expanded Tech-Software Sector ETF (IGV).<\/p>\n
The dramatic single-day drops in stocks like Unity Software (U) by 30% and Astera Labs (ALAB) by 20% highlight the market’s new focus on profitability and AI-driven threats. For traders, this means buying put options on non-AI tech companies that have yet to report their earnings could be a valuable strategy. These large moves show that implied volatility, while high, may not fully capture the downside risk for companies offering weak guidance.<\/p>\n
Even though broad market indexes like the S&P 500 seem calm, there is significant turmoil under the surface. The CBOE Volatility Index (VIX) is currently trading at a relatively low 15, which likely underprices the risk of this severe sector rotation. This environment makes buying protection on specific vulnerable sectors more appealing than on the broader market indices.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" US payrolls beat forecasts; unemployment dipped. Nasdaq slipped as rate-cut hopes shifted, tech stocks tumbled post-earnings.<\/p>\n","protected":false},"author":62,"featured_media":16985,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-41627","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\/41627","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=41627"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/41627\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16985"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=41627"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=41627"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=41627"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}