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The main U.S. equity indexes struggled for direction on Wednesday, with a better-than-forecast employment situation during the first month of the new year dashing hope the Federal Reserve will cut interest rates sooner rather than later. Stocks closed slightly lower, while bonds suggest Fed Chair Jerome Powell’s steady-as-she-goes narrative will carry at least through May.
The January jobs report showed U.S. payrolls expanded by 130,000 and exceeded a Wall Street consensus forecast of 55,000. The unemployment rate declined to 4.3% from 4.4% in December.
The Bureau of Labor Statistics cited gains in health care, social assistance and construction and losses in federal government and financial activities. According to Access/Macro senior advisor Guy Berger, the January jobs report “was the second good one in a row – arguably not just a good report, but very good.”
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Price action in the bond market – the yield on the 2-year U.S. Treasury note was up to 3.510% from 3.454% on Tuesday, and the 10-year yield rose to 4.174% from 4.145% – suggests investors, traders and speculators “saw the surprising strength in jobs as a guarantee that the Fed would have no reason to cut the fed funds rate anytime soon,” according to Louis Navellier of Navellier & Associates.
“Growth and momentum names are taking the most heat on the prospect of interest rates staying higher for longer,” Navellier notes. Dividend-paying stocks, value stocks and energy stocks are holding up well, Navellier observes, with financial stocks lagging today and so far in 2026.
By the closing bell, the Dow Jones Industrial Average was down 0.1% at 50,121, and the Nasdaq Composite was off 0.2% at 23,066. But the S&P 500 basically flat, falling just 0.34 points to 6,941.
SHOP takes a drop
Shopify (SHOP) popped more than 11% in pre-market trading after management of the tech stock reported 31% year-over-year revenue growth for the fourth quarter and announced a $2 billion stock buyback plan.
SHOP opened the regular trading session up 9.2% but closed down 6.5% and shed about $11 billion in market cap, as investors, traders and speculators continue to weigh the impact of artificial intelligence (AI) on software stocks. SHOP generated a total return of more than 50% in 2025 but is down nearly 30% so far in 2026.
The e-commerce platform reported earnings of 48 cents per share and missed Wall Street’s estimate of 51 cents. But revenue was $3.67 billion and beat a $3.59 billion forecast. Shopify also posted its 10th consecutive quarter of double-digit free cash flow margin (pdf) at 19%.
Management expects revenue to grow “at a low-thirties percentage rate on a year-over-year basis” for the first quarter and free cash flow margin “in the low-to-mid teens, slightly below Q1 of 2025.”
KHC is still Warren Buffett’s stock
Kraft Heinz (KHC, +0.2%) traded lower and then higher on Wednesday, reversing the SHOP setup after new management reversed course and said it would no longer separate the Warren Buffett stock into two companies.
New CEO Steve Cahillane, who joined Kraft Heinz in January, said it’s “prudent to pause work” related to a plan announced in September to split faster-growing brands off as Global Taste Elevation and keep other brands under a North American Grocery umbrella.
Buffett said at the time that he was “disappointed” in previous management’s decision to undo a merger he orchestrated in 2015. “Since joining the company,” Cahillane said in the KHC’s earnings announcement (pdf), “I have seen that the opportunity is larger than expected and that many of our challenges are fixable and within our control.”
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The CEO’s No. 1 priority is returning Kraft Heinz to profitable growth, “which will require ensuring all resources are fully focused on the execution of our operating plan.”
The food conglomerate reported earnings of 67 cents per share, down from 84 cents a year ago but better than Wall Street’s forecast for 61 cents. Revenue was down year over year for the ninth consecutive quarter, by 3.4% this time, to $6.35 billion, short of a consensus estimate of $6.37 billion.