The S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ) closed Wednesday lower, although both ETFs staged recoveries from their intraday lows.
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Tech stocks, which account for roughly one-third of the S&P 500, continued to sell off, with Nvidia (NVDA), Google (GOOGL), Amazon (AMZN), and Tesla (TSLA) all closing in the red. Within tech, software has been hit the hardest on fears that AI will lead to lower sales and profit margins within the industry. That’s a misconception, according to Nvidia CEO Jensen Huang.
“There’s this notion that the tool in the software industry is in decline, and will be replaced by AI… It is the most illogical thing in the world, and time will prove itself,” said Huang at a Cisco (CSCO) AI conference in San Francisco.
President Trump spoke with Chinese President Xi Jinping over the phone this morning and discussed a wide range of topics including trade, oil, Taiwan, and the Russia-Ukraine war. On the U.S. side, Trump said that China had committed to buying 25 million tons of soybeans next season and was considering additional purchases of agricultural products. Xi added that the U.S.-China relationship is a top priority for him and stressed that Taiwan is a territory under Chinese control. Both leaders promised to continue cooperation and communication.
Meanwhile, a jobs report from ADP showed that the U.S. added just 22,000 private payrolls in January, below the consensus estimate of 45,000 and falling from 41,000 in December. The economy added a total of 398,000 jobs in 2025, down significantly from 771,000 in 2024.
At the same time, the median annual pay for job stayers grew by 4.5% year-over-year in January to $61,800, while the annualized pay growth for job changers fell to 6.4% from 6.6%. “While we’ve seen a continuous and dramatic slowdown in job creation for the past three years, wage growth has remained stable,” said ADP Chief Economist Nela Richardson.
Finally, the ISM Services Purchasing Managers’ Index (PMI) remained unchanged at 53.8 in January, above the estimate of 53.5 and registering 19 consecutive months of expansion. That bodes well for the economy, as services account for roughly 80% of gross domestic product (GDP). For context, a reading above 50 signals expansion, while a reading below 50 points to contraction.
The S&P 500 (SPX) closed with a 0.51% loss, while the Nasdaq 100 (NDX) fell by 1.77%.
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