In the early morning of February 13, Beijing time, U.S. stocks fell in midday trading on Thursday, with the Dow Jones Industrial Average falling more than 600 points. Silver and crude oil prices tumbled. Traders are weighing earnings reports from major companies including Cisco Systems and McDonald's. The number of people filing for unemployment benefits in the United States fell to 227,000 last week.
The Dow fell 609.34 points, or 1.22%, to 49512.06 points; the Nasdaq fell 355.58 points, or 1.54%, to 22710.89 points; the S&P 500 fell 84.95 points, or 1.22%, to 6856.52 points.
As of press time, spot silver has fallen 11% and is now at $74.80 per ounce, while WTI crude oil has fallen by 3% and is now at $62.69 per barrel.
Cisco Systems shares fell 11.7% after the maker of networking hardware such as switches and routers issued disappointing guidance for the current quarter. The company's revenue in the second fiscal quarter exceeded expectations by 10% year-on-year, and the growth of AI infrastructure orders from hyperscale cloud vendors "significantly accelerated" to US$2.1 billion. Revenue guidance for this fiscal year was raised by at least more than 1%, and revenue guidance for the third fiscal quarter was higher than expected. However, gross profit margin guidance for the third fiscal quarter fell instead of rising, with a maximum year-on-year drop of more than 3 percentage points to 65.5%, which was wider than the decline in the second fiscal quarter.
McDonald's announced earnings that beat expectations. The company reported fourth-quarter revenue of $7.01 billion, beating consensus estimates of $6.81 billion, while adjusted earnings per share of $3.03 was in line with analysts' expectations. Global comparable sales grew 5.7% in the quarter, significantly exceeding analysts' average estimate of 3.7%. U.S. comparable sales rose 6.8%, reversing a 1.4% decline in the same quarter last year.
U.S. stocks closed lower on Wednesday, with the Dow Jones Industrial Average closing slightly down 0.1% and the Nasdaq Composite Index down about 0.2%. The S&P 500 ended the day slightly lower. The January non-farm employment report released that day showed that the number of jobs increased significantly by 130,000 last month, which was much higher than economists' expectations and much higher than the downwardly revised increase in December. The unemployment rate edged down to 4.3% from 4.4%.
The January non-farm payrolls report provided some relief to investors who had worried that the report would show a decline in the labor market. A series of recent data indicate that economic growth is slowing down in a "no hiring, no layoffs" environment.
But the strong jobs data also cast a shadow on the Fed's interest rate outlook. If high inflation remains a problem, that could mean fewer rate cuts than traders would like.
However, Moody's chief economist Zandi said don't be too reassured by this set of optimistic data. He does not think growth can be sustained. Zandi has repeatedly warned that the foundation of the U.S. economy is unstable and may slip into recession at any time. He posted on the X platform on Wednesday that the latest employment data did not alleviate his concerns at all.
He said: "The labor market remains fragile and extremely vulnerable to shocks. Yes, non-farm employment increased by 130,000 in January, but considering the significant downward revision of historical data, employment has not grown at all since Trump significantly increased tariffs in April last year."
Zandi also emphasized that almost all job growth in January came from the health care industry, which he believed did not bode well for the overall U.S. economy.
"This will put a lot of pressure on Friday's CPI report because if the data is dovish, at least the market can understand that the inflation part of the Fed's considerations is cooling down," said Tom Lee, director of research at Fundstrat Global Advisors.
"Certainly now if the job market is showing quite a bit of resilience, that's a relief from a macro perspective because at least we're not seeing a recession," he said.
In terms of economic data on Thursday, the number of people filing for unemployment benefits in the United States fell to 227,000 last week, a smaller-than-expected decline.
The U.S. Department of Labor announced on Thursday that the number of initial jobless claims fell by 5,000 to 227,000 on a seasonally adjusted basis for the week ended February 7. Economists polled by Reuters had expected 222,000 initial claims for the week.
Last week's decline offset only a fraction of the previous week's surge, which was blamed on the snowstorms and freezing weather that swept much of the country and a normalization after seasonal fluctuations late last year and early 2026.
The report shows that in the week ended January 31, continuing unemployment benefits data, which is a hiring indicator, increased by 21,000 people to 1.862 million people after seasonality adjustment, which is also affected by seasonal fluctuations.
Although the number of long-term unemployed persons fell in January, the median duration of unemployment remains close to where it was four years ago. Fresh college graduates are facing severe employment difficulties.
