Stock indexes closed mixed on Wednesday, with the S&P 500 hitting a 2-week high and the Nasdaq 100 reaching a 1-week high. US Jan nonfarm payrolls beat expectations, leading to higher bond yields and reduced expectations for Fed rate cuts. Unemployment rate dropped to 4.3%, with average hourly earnings up 3.7% y/y.

Better-than-expected US jobs report supported stocks, while declines in software and real estate service companies limited gains. US MBA mortgage applications fell by -0.3%, with the purchase mortgage sub-index down -2.4% and the refinancing mortgage sub-index up +1.2%. Average 30-year fixed mortgage rate remained unchanged at 6.21%.

US Jan nonfarm payrolls rose by +130,000, exceeding expectations, with the unemployment rate dropping to 4.3%. Average hourly earnings increased by +3.7% y/y. Annual benchmark revision to 2025 US payrolls resulted in a subtraction of -862,000 jobs. Fed’s Schmid’s comments on holding rates at a “restrictive” level weighed on stocks and bonds.

Earnings season continues with positive results, as 78% of S&P 500 companies beat expectations. S&P earnings growth expected to rise by +8.4% in Q4, excluding mega-cap tech stocks. Markets discount a 6% chance of a -25 bp rate cut at the next Fed meeting in March. Overseas markets closed mixed, with Euro Stoxx 50 down by -0.19%.

Interest rates rose with 10-year T-note yield at 4.174%. European government bond yields fell, with the 10-year German bund yield at 2.791%. Swaps indicate a 3% chance of a -25 bp rate cut by the ECB in March. Strength in chip makers and AI-infrastructure stocks supported the market, while software and real estate service stocks faced declines.

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