Jan 2026 Non-Farm Jobs Surpass Expectations; Fed Cut Odds Drop; US Equities Turn Negative

U.S. nonfarm payrolls for January surged 130,000, far exceeding the 55,000 median forecast, with the unemployment rate falling to 4.3%, the lowest since August 2025. The data preceded a significant unwind in Fed cut expectations: three-month cut odds dipped below 5%, and the first Fed cut was pushed to July. Yields on U.S. Treasuries rose sharply—10-year yield climbed 3 bps to 4.172%, and the 2-year yield climbed 6 bps to 3.514%—sparking broader risk-off sentiment. Major U.S. equity indices closed negative on the news: Dow Jones fell 66.74 (-0.13%) to 50,121.40, Nasdaq down 36.007 (-0.16%) to 23,066.467, and S&P 500 nearly持平 at 6,941.47. The FANG+ index was -0.85%, and the Philadelphia Semiconductor Index was -2.28%. Analysts highlight mixed signals: while labor market conditions support a potential 3% neutral stance for March, weakness in the labor force participation rate and low quit rates suggest the market remains underweighted. Cryptocurrencies also retreated, with Bitcoin near $67,500.