Both the S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ) closed down by over 1% on Thursday as investors digested a series of fresh labor market data points amid a continued selloff in tech stocks.
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Before the market open, outplacement firm Challenger, Gray & Christmas reported that U.S.-based employers announced 108,435 job cuts in January, up by 118% year-over-year and registering the highest level for the month since the Great Recession in 2009. In addition, employers announced just 5,306 new hires in January, also the lowest monthly level since 2009. Two companies, UPS (UPS) and Amazon (AMZN), were responsible for 46,000 of the job cuts during the month.
Furthermore, the Department of Labor announced that initial jobless claims for the week ended January 31 increased by 22,000 to 231,000, above the consensus estimate of 212,000. Continuing jobless claims, which trail initial claims by a week, rose by 25,000 to 1.844 million, below the expectation of 1.85 million. Initial jobless claims serve as a gauge of layoffs, while continuing jobless claims track the number of people receiving unemployment benefits and reflect ongoing unemployment. On the bright side, the four-week moving average of initial jobless claims sits at 212,250 and is still below the average levels seen in 2025, which ranged between 212,000 and 245,000.
Meanwhile, data from the Job Openings and Labor Turnover Survey (JOLTS) showed 6.542 million job openings in December, below the consensus estimate of 7.25 million and falling from 6.928 million in November. Taken together, the data point to a continuing trend of a slow-to-fire and slow-to-hire jobs market.
“Bottom line: Firms aren’t even thinking about hiring (outside of healthcare and all-star AI talent),” said Navy Federal Credit Union Chief Economist Heather Long. “The encouraging news? Layoffs still remain low.”
On the CME FedWatch tool, the odds of a 25 bps interest rate cut at the March 18 Federal Open Market Committee (FOMC) meeting more than doubled to 20.7% from 9.4% yesterday. A weak labor market supports the argument for rate cuts because lower rates encourage spending and investment from both businesses and consumers.
The S&P 500 (SPX) closed with a 1.23% loss, while the Nasdaq 100 (NDX) fell by 1.38%.