US economy adds 130,000 jobs in January, beats expectations; Dow Jones, S&P500 and NASDAQ trade mixed

The US economy is showing signs of recovery as the latest jobs data showed better-than-expected numbers. The jobs data for January showed the economy added 130,000 non-farm payrolls, much higher than the expectations of 70,000 and 49,000 in the previous month. The unemployment rate also improved to 4.3% vs the expectations of 4.4%, trimming the bets on rate cuts.

The reports cooled off the investor caution on the US economy after the retail sales data indicated weak consumer confidence in the economy. The latest retail sales data remained largely unchanged vs the expectation of 4.9% growth.

The US markets bounced back from the red to hit intraday high levels. However, the rally was short-lived as the Dow Jones fell over 200 points to trade below 50,000. The S&P500 also fell short of touching the 7,000 levels and fell over 60 points. The NASDAQ index also reeled under the pressure of tech stocks and hovered around the 25,100 levels.

The Wednesday’s jobs report also came with major revisions, which cautioned investors. The 2025 payroll data was revised downwards to 181,000, less than a third of the earlier reported number of 584,000.

In the bond market, 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, jumped more. It climbed to 3.51% from 3.45%.

The stronger-than-expected jobs data pushed traders to pare back their bets on how many cuts to interest rates the Fed will make this year, though most are still betting on at least two, according to data from CME Group.

The Fed has put its cuts to interest rates on hold, and a further weakening of the job market could have pushed it to resume 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 US consumer level is arriving on Friday.