Stock market news live updates: Stock futures fall ahead of jobs report, after Big Tech results disappoint

U.S. stock futures were lower early Friday after a shocking jobs report for January showed the labor market remained stronger than expected, while results from Big Tech stocks out last night weighed on investor sentiment.

In January, the U.S. economy added 517,000 jobs, more than the 190,000 expected by economists, while the unemployment rate fell to 3.4%, the lowest since 1969.

Futures tied to the S&P 500 (^GSPC) fell 1.1%, while futures on the Dow Jones Industrial Average (^DJI) were down 0.5%.

Contracts on the technology-heavy Nasdaq Composite (^IXIC) dropped a sizable 1.7% pre-market as technology stocks faltered.

Continued resilience in the labor market likely takes the pressure off the Federal Reserve to reverse course on its rate hiking campaign, an outcome markets have been betting on happening later this year, which in part helped fueled a stock market rally.

Apple (AAPL), Amazon (AMZN), and Google parent Alphabet (GOOG, GOOGL) — the market’s most heavily-weighted companies — all posted quarterly results that underwhelmed Wall Street. Shares of the megacap names were each down 2.7%, 5.3%, and 4.8%, respectively, pre-market.

Apple said revenue fell 5% as headwinds from COVID lockdowns in China and worker protests at manufacturer Foxconn’s facility in the nation weighed on shipments during the period. iPhone sales, a key metric for the company, dropped 8% year-over-year to $65.8 billion, a meaningful miss from estimates of $68.3 billion.

Amazon, meanwhile, unveiled better-than-expected sales growth in the fourth quarter but disappointed on profit — largely the result of big losses from its stake in electric vehicle maker Rivian Automotive. Amazon’s AWS cloud unit grew more than 20% compared to the same period in 2022 but fell short of expectations.

Alphabet’s results also missed forecasts on revenue and earnings per share, as advertising declined year-over-year. The numbers come after the company laid off about 12,000 employees in January, a move CEO Sundar Pichai blamed on Alphabet overhiring during the pandemic boom.

“We have significant work underway to improve all aspects of our cost structure, in support of our investments in our highest growth priorities to deliver long-term, profitable growth,” Alphabet CFO Ruth Porat said in a statement.

Elsewhere outside of technology companies, investors were watching Nordstrom (JWN) following reports investor Ryan Cohen has built a sizable stake in the department store. The move was confirmed to Yahoo Finance by a person familiar with the matter. Shares surged 28% ahead of the open.

Tigard, Oregon, USA - Sep 7, 2019: The entry to a Nordstrom department store in Tigard, a southwestern suburb within the Portland metropolitan area, at night.Tigard, Oregon, USA - Sep 7, 2019: The entry to a Nordstrom department store in Tigard, a southwestern suburb within the Portland metropolitan area, at night.

Tigard, Oregon, USA – Sep 7, 2019: The entry to a Nordstrom department store in Tigard, a southwestern suburb within the Portland metropolitan area, at night.

Stocks have been on a tear to start 2023 as investors bet that weakening economic data will prompt the Federal Reserve to end its rate hiking cycle sooner than expected.

That view was bolstered by remarks from Federal Reserve Chair Jerome Powell on Wednesday that suggested signs of “disinflation” are building in the economy as the U.S. central bank raised interest rates by a smaller hike of 0.25% — even as he asserted more increases were ahead.

Still, many strategists have been skeptical of the market’s uptrend and Wall Street’s anticipations the Fed will pause its interest rate hiking campaign this year.

“Now is not the time for nuance. Aggressive tightening in 2022 has led to signs of decelerating inflation but from levels that remain unacceptably high,” Lazard chief market strategist Ron Temple said in a note. “Falling bond yields and higher equity prices have complicated the task by easing the financial conditions that the Fed is trying to tighten, necessitating forceful messaging from the FOMC this week.”

“The Fed won’t be able to rest until labor market conditions ease significantly from current levels, and that is unlikely without higher rates for longer than the markets currently expect.”

At an investment conference in Miami, Florida earlier this week, Morgan Stanley’s top market strategist Mike Wilson attributed the rally to the January effect — a market theory that securities’ prices increase in the month of January more than in any other month after a year-end sell-off for tax purposes.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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