Stocks Steady as Robust U.S. Jobs Data Dents Fed Rate Cut Expectations

Rowan Ashford

Published: February 12, 2026 6:28 PM ET

Stocks Steady as Robust U.S. Jobs Data Dents Fed Rate Cut Expectations

The stock market experienced a modest decline on Wednesday as stronger-than-expected U.S. job growth impacted expectations for Federal Reserve interest rate cuts. Despite an initial boost, major indices, including the Dow and Nasdaq, faced downward pressure after traders adjusted their predictions for future rate cuts.

U.S. Jobs Data Influences Market Dynamics

The S&P 500 and TSX started the trading session positively, reaching their highest levels in over a week. A strong employment report revealed job growth exceeded expectations for January, driving the unemployment rate down to 4.3%. However, as the day progressed, investors dampened hopes for aggressive rate cuts by the Fed.

Key Stock Market Movements

Dow Jones Industrial Average fell by 66.74 points (0.13%) to close at 50,121.40.
S&P 500 lost 0.34 points, finishing at 6,941.47.
Nasdaq Composite decreased by 36.01 points (0.16%) to settle at 23,066.47.
S&P/TSX composite index declined by 2.64 points (0.01%) to 33,254.19.

Earlier in the session, the TSX set a new intra-day record high at 33,693.39. However, gains evaporated as concerns about rate cuts prompted traders to reassess their strategies.

Sector Performance Highlights

The technology sector dropped 4.45%, with Shopify Inc. shares falling 7.03% following disappointing free cash flow forecasts.
Real estate investments declined by 2.9%, led by a 27.83% plunge in Allied Properties REIT shares.
Energy sector stocks rose by 3.06%, driven by an increase in oil prices, which settled at $64.63 a barrel.
Financials ended down 1.29%, while consumer staples advanced by 1.44%.

Investor Sentiment and Future Focus

Market participants are closely monitoring the upcoming U.S. January Consumer Price Index (CPI) inflation report, which is due on Friday. According to market strategist Julia Hermann, the robust job growth indicates a resilient economy, reducing the immediate need for aggressive rate cuts.

As interest rate expectations shifted, the probability of a 25-basis-point cut in June increased slightly. CME Group’s FedWatch tool showed expectations for a hold in rates rising to 41% from 24.8%.

With advancing issues slightly outpacing decliners, market activity remained vigorous, with over 20 billion shares exchanged on U.S. exchanges. The volatility in individual stocks is reflected in the mixed performance of major industry sectors, highlighting ongoing market adjustments in response to economic data.