Softer US Labor Sparks Equity Selloff

February 5, 2026 at 21:00 UTC

4 min read

US stocks decline chart with ADP payroll miss and jobless claims impacting equities and USD

Key Points

ADP's payroll miss and higher initial jobless claims signaled labor-market softening, which weakened the dollar, raised rate-cut odds, and caused intraday volatility.
JOLTS openings fell and initial jobless claims rose, which reinforced a low-hire/low-fire narrative and kept attention on the delayed monthly payrolls.
US and European equities declined as risk appetite cooled; utilities outperformed while basic materials and technology led sector losses.
Completed and announced M&A and asset deals, including H.I.G.'s CargoTuff acquisition and SIM IP–Garden Intel merger, produced idiosyncratic stock moves.

Global Market Summary

U.S. equities fell after softer labor signals and a marginal services PMI miss, with the S&P 500 (SPX) down 1.34%, the Nasdaq (^IXIC) down 1.75% and the Dow (DJIA) down 1.27%. European benchmarks retreated as risk appetite cooled, with the CAC (FRA40) down 0.29%, the FTSE (UKX) down 0.89% and the DAX (DAX) down 0.46%. Asia was mixed: the Hang Seng (HSI) rose 0.14% while the Nikkei (NKY) fell 0.88% and Shanghai (000001.SS) eased 0.64%.

Top Movers

Sectors: utilities (XLU +0.15%) outperformed while basic materials (XLB -2.59%) and technology (VGT -2.05%) led declines. Notable movers: KLIC (+17.97%), MCK (+16.94%) and SITM (+16.89%) led gains; top decliners included FLNC (-35.27%), RAL (-32.57%) and EL (-19.84%).

Macro highlights

U.S. labor indicators softened: initial jobless claims rose 22,000 to 231,000 and JOLTS job openings fell to 6.542 million, reinforcing a low-hire/low-fire narrative and keeping focus on the delayed monthly payrolls. The ECB held its policy rate at 2.15% and the BoE at 3.75%, producing limited policy surprise ahead of the ECB press conference.

News that moved markets

ADP's private payrolls report showed a 22,000 gain in January versus a 45,000 consensus, a miss that weakened the dollar, increased rate-cut odds and contributed to intraday volatility and rotation into defensives. The ISM services PMI printed 53.8, slightly below estimates, prompting a muted market reaction and capping cyclical upside. Completed transactions included H.I.G. Capital's acquisition of CargoTuff, Precore Gold's 100% acquisition of the Lac Big-Rush gold property, and First National Realty Partners' completion of over $200 million in capital markets activity and 1.5 million square feet leased. Announced deals included a $150 million merger between SIM IP and Garden Intel and ShipTime's acquisition of Warehowz.

Upcoming session watchlist

US Non Farm Payrolls (JAN) — consensus 70K vs 50K prior, Feb 06, 01:30 PM | Gauges labor demand and wage pressure shaping household income and spending.
US Unemployment Rate (JAN) — consensus 4.4% vs 4.4% prior, Feb 06, 01:30 PM | Measures labor market slack and consumer income support for spending.
US Michigan Consumer Sentiment Prel (FEB) — consensus 55.8 vs 56.4 prior, Feb 06, 03:00 PM | Tracks household confidence and spending plans influencing near-term demand.
DE Balance of Trade (DEC) — consensus €14.1B vs €13.1B prior, Feb 06, 07:00 AM | Indicates export strength and external demand conditions influencing growth.
CA Unemployment Rate (JAN) — consensus 6.8% vs 6.8% prior, Feb 06, 01:30 PM | Measures labor market slack and domestic demand momentum for Canada.

Key Takeaways

US equities sold off after ADP's payroll miss and softer labor data, producing broad declines across major indices and heightened intraday volatility.
The dollar weakened on the labor surprise, which pushed rate-cut odds higher and supported a rotation into defensive sectors like utilities.
Notable single-stock moves and completed/announced transactions produced outsized idiosyncratic gains and losses and contributed to sector dispersion.