Stocks opened higher Friday following the January jobs report but swung lower after the latest consumer sentiment data showed inflation worries are rising. President Donald Trump's promises for retaliatory tariffs only elevated investors' anxiety.
Ahead of the opening bell, the Bureau of Labor Statistics said the U.S. added 143,000 jobs in January – less than the 169,000 economists expected. Still, payroll figures for both November and December were upwardly revised and the unemployment rate ticked lower to 4.0% from 4.1%.
"The jobs report shows the labor market kicked off 2025 in good shape," says Bill Adams, chief economist for Comerica Bank. "There were big temporary drags in January, but the trend over the last few months was revised to look stronger."
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Adams adds that the report will do little to change the Fed's plans to hold interest rates steady in the near term and the market seems to agree. According to CME Group's FedWatch tool, futures traders are now pricing in a 92% chance the central bank will not cut rates at its next meeting in March, up from 84% one day ago.
Inflation expectations are rising
The main indexes opened to modest gains after the labor market update but turned tail following the release of the University of Michigan's Consumer Sentiment Index. Preliminary data for February show the index fell to 67.8 from January's final reading of 71.1 – its second straight monthly drop.
A main concern among those surveyed was "buying conditions for durables, in part due to a perception that it may be too late to avoid the negative impact of tariff policy."
President Trump's announcement that he will unveil retaliatory tariffs on several trading partners next week likely did little to ease these worries. While no details were given, Trump said that these are necessary to ensure "that we're treated evenly with other countries," according to Reuters.
The more concerning data from the UofM consumer sentiment report, though, was a massive jump in year-ahead inflation expectations, to 4.3% from 3.3% in the prior month. This marks the highest reading since November 2023 and only the fifth time in 14 years there's been such a large one-month rise.
At the close, the Dow Jones Industrial Average was down 1.0% at 44,303, the S&P 500 was off 1.0% at 6,025, and the Nasdaq Composite was 1.4% lower at 19,523.
Amazon sheds $101 billion in market value
In single-stock news, Amazon.com (AMZN) fell 4.1% – shedding $101 billion in market value and making one of the worst Dow Jones stocks Friday – after the world's largest e-commerce company issued a soft first-quarter outlook.
This offset AMZN's top- and bottom-line fourth-quarter beats and notable Amazon Web Services (AWS) and advertising revenue growth.
"Probably the biggest number for investors was growth in AWS, Amazon's cloud service. It grew 19%, right in line with the analysts" says Stephen Callahan, trading behavior specialist at Firstrade. "Compare that to Alphabet (GOOGL) and Microsoft (MSFT), which both saw growth decelerate in their cloud divisions."
This suggests that Amazon is winning more artificial intelligence (AI) business than its fellow Mag 7 firms and "has regained the leadership position in AI," Callahan adds.
Other stocks on the move
Elsewhere on the earnings calendar, Affirm Holdings (AFRM) stock soared 21.8% after the buy now, pay later company reported a surprise fourth-quarter profit and revenue beat.
e.l.f. Beauty (ELF) stock tanked 19.6% after the cosmetics and skincare company fell short of fiscal Q3 profit estimates and lowered its full-year forecast.
Pinterest (PINS) stock surged 19.1% after the visual search and discovery platform reported revenue above $1 billion for the first time ever in its fourth quarter. The company also issued a strong first-quarter forecast.
Should bulls cheer for the Chiefs on Super Bowl Sunday?
Ahead of another busy week that includes several blue chip earnings and the next Consumer Price Index (CPI) report, investors may want to keep an eye on the outcome of Sunday's big game to determine the longer-term direction of the market.
According to one slice of the Super Bowl Indicator, bulls might want to cheer for the Kansas City Chiefs to win Super Bowl LIX. As Ryan Detrick, chief market strategist at Carson Group, explains: Since 1967, the S&P 500 has averaged a full-year return of 10% when the NFC team wins the Super Bowl and an 8.1% annual return when the AFC wins.
But drilling down on specific teams, Detrick notes that in the four times the Chiefs have won the Super Bowl, the S&P 500 has averaged a 15.9% annual return. Compare this to the Philadelphia Eagles, which notched their only Super Bowl win back in 2018 – a year the S&P 500 finished down more than 4%.
However, as Detrick is quick to point out: No one should ever invest based on who wins the Super Bowl or "how bad the refs will be (who are we kidding, we know they want the Chiefs to win)," he says. Indeed, it should be viewed as a fun correlation folks revisit once a year.
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