Here is Schwab's early look at the markets for Thursday, February 12.
A day after January's jobs report displayed surprising vigor, investors await round two with tomorrow's Consumer Price Index, or CPI. Stocks ended flat to lower yesterday as chances of a near-term Federal Reserve rate cut diminished appreciably.
The U.S. economy added 130,000 jobs in January, almost double the 70,000 expected, the government said Wednesday. Unemployment dipped to 4.3% from the prior 4.4%, and hourly earnings were also solid, up 0.4% from the prior month. In the wake of the report, the 10-year Treasury yield popped four basis points to 4.17% but stayed within the near-term 4.1% to 4.2% range despite an unimpressive 10-year note auction.
"The market is aggressively pricing out rate cuts for this year after the jobs report," said Kevin Gordon, head of macro research and strategy at the Schwab Center for Financial Research, or SCFR. "The Fed looks vindicated in saying there has been some stabilization in the unemployment rate. The three-month average of nonfarm payrolls growth shifted up to 73,000 in January, the highest since February 2025."
In the aftermath of the data, chances of a Federal Reserve rate cut next month fell dramatically to just 6% from 20% earlier this week, while chances of at least one rate cut by June now stand at less than 60%, down from 75% on Tuesday.
There's more jobs data on the way as investors gear for weekly initial jobless claims data before the open. Last week's jump to 231,000 raised some eyebrows, but one week isn't a trend. The Briefing.com consensus for today's number is 230,000. That's relatively moderate historically but above recent figures of just above 200,000.
Cisco and AppLovin both reported after Wednesday's close, with Cisco's earnings and revenue narrowly surpassing analysts' estimates. Cisco's networking business sales rose 21% year over year, accelerating from 15% growth in the first fiscal quarter and raised guidance and its dividend, but shares initially dropped 3% in post-market trading. Shares had rallied sharply into earnings. .
AppLovin beat analysts' earnings and revenue estimates while guiding for better-than-expected first quarter revenue, but shares fell 6% after the close as software stocks continued getting punished.
McDonald's reported late Wednesday and shares initially rose in post-market trading after the company beat earnings and revenue expectations. The company also increased its dividend and posted global sales growth of 5.7% at stores open at least a year. In its release, McDonald's said its efforts to improve value and affordability helped improve traffic.
Earnings continue this afternoon with Applied Materials and Arista Networks. The first, a semiconductor equipment manufacturer that beat analysts' earnings and revenue expectations last time out but saw shares fall on guidance that was seen as cautious. The company said then it expects higher demand beginning in the second half of 2026, and shares are up sharply so far this year.
Arista is another company participating in the AI infrastructure build-out and could be a decent barometer of demand.
Returning to yesterday's surprisingly robust jobs report, there was another less bullish element as the Bureau of Labor Statistics, or BLS, downwardly revised November and December jobs growth by 17,000, not massive relative to previous ones. However, the data also featured a dramatic downward benchmark revision of 862,000 on a non-seasonally adjusted basis to jobs reports released in the year ending last March, on the high end of expectations and the biggest downward revision since 2009.
Employment growth last year fell to 181,000 from 584,000, seasonally adjusted.
"Payroll gains in 2025 have been revised down to 181,000," Gordon said. "In the full history of payroll data, the only year that has been weaker when it comes to gains is 2003."
Checking January's job growth by sector, the biggest gains were in health care and social assistance, continuing a trend where services sector jobs growth outpaces goods producing. Federal government jobs fell sharply, and so did financial activities employment. Other industries had little change, though manufacturing inched up for the first time since November 2024 and construction jobs climbed, possibly thanks to data center building activity.
Additionally, the government said January's icy conditions across the Eastern U.S. affected its household data collection, which is used to determine the unemployment rate. The January response rate was below average. This could suggest a revision ahead when February's report comes around early next month, and puts some uncertainty around the 4.3% unemployment rate in yesterday's report.
Another consideration with 2025 jobs growth fully accounted for is the very dramatic drop in job creation over the last few years. Nonfarm payrolls growth of 2.5 million in 2023 fell to 1.5 million in 2024 and 181,000 in 2025. Real gross domestic product growth (GDP) sank from 2.9% in 2023 to 2.3% for the first three quarters of last year, with fourth quarter GDP due next week.
With the jobs report behind, tomorrow morning's 8:30 a.m. ET January Consumer Price Index, or CPI, becomes the next major data with market-moving potential. It's expected to show 0.3% monthly growth for both headline and core CPI, which excludes volatile food and energy prices. Annual core and headline growth are both seen at 2.5%, not much changed from the prior month.
There's a chance, however, that the CPI could be hotter than expected, a trend in recent Januarys. This could be a seasonal effect that statisticians need to iron out, but investors should be aware of the possibility. That's why a surprisingly strong CPI might be discounted, to some extent.
On Wall Street Wednesday, major indexes finished near unchanged except for the small-cap Russell 2000, which dipped as rate cut chances fell after the jobs report. Small-cap stocks are often more interest-rate sensitive, typically with more exposure to debt.
Though the S&P 500 Index vacillated Wednesday between a brief early rally after the jobs data followed by pressure, followed again by some buying, the result was basically neutral. Still, seven of 11 S&P 500 sectors gained, led by energy as crude oil rose on continued tension centered around Iran. President Trump posted Wednesday that he expects nuclear negotiations with Iran to continue.
Software stocks suffered again on the same AI worries that capsized the sector last week. Shares of Salesforce, AppLovin, ServiceNow, and Adobe were among the names hurt. Financial stocks continued their descent as well, also hit by ideas that recent AI advances could eat into demand for their services. On the whole, info tech climbed slightly, helped by a rebound in chip names.
Industrials kept their engines running Wednesday, led by big gains for Caterpillar and Deere. Mining firms did well as silver, copper, and gold rebounded, though all remain below last week's heights.
Meanwhile, the international MSCI EAFE Index, which includes large- and mid-cap stocks across 21 developed markets excluding the U.S. and Canada, continues to outpace U.S. equities this year, ahead of the S&P 500 Index by 700 basis points.
"Developed market international stocks are benefitting from higher weights in industrials and financials, and less in tech than in the U.S.," said Michelle Gibley, director of international equity research and strategy at SCFR. "It’s not just U.S. investors looking to diversify – it can also be seen in foreign investors hedging exposure to the U.S. dollar."
In individual trading Wednesday, Shopify descended 6% despite the firm beating analysts' revenue estimates and saying it expects solid first quarter revenue growth. The company also authorized a $2 billion share repurchase program. Valuation concerns and profit taking likely were to blame for the stock's pullback, Briefing.com said.
Micron powered 10% higher Wednesday after the company waved aside market concerns about competition, saying it's begun volume production and commercial shipments of its latest generation of high-bandwidth chips, Barron's reported.
Vertiv, a data center infrastructure partner of Nvidia, saw shares surge 24% after an earnings beat and solid guidance. Nvidia climbed almost 1%.
Apple rose slightly despite a Bloomberg report that the long-planned Siri upgrade ran into snags, potentially pushing back the release of some functions.
Mattel plunged 25% after fourth quarter sales rose less than analysts had expected. Guidance also disappointed.
Amazon fell 1% and is down seven straight sessions since its earnings missed expectations last week.
Lyft cratered 17% after its revenue missed analysts' expectations. Guidance for first quarter bookings met consensus, and gross bookings climbed 19% last quarter.
The Dow Jones Industrial Average® ($DJI) slid 66.74 points Wednesday (-0.13%) to 50,121.41; the S&P 500 Index (SPX) fell 0.34 points (-0.00%) to 6,941.47 , and the Nasdaq Composite® ($COMP) edged down 36.01 points (-0.16%) to 23,066.47.