Dow Climbs as Wall Street Shrugs off Soft Jobs Report and Microsoft Stumble

With input from CNBC, Reuters, Bloomberg, and Investor’s Business Daily.

The Dow pushed higher on Wednesday as investors brushed aside weak private payrolls data and a drop in Microsoft shares.

The Dow Jones Industrial Average rose about 225 points, or 0.5%. The S&P 500 inched up 0.1%, while the Nasdaq Composite slipped 0.1%, held back by tech weakness.

Microsoft fell nearly 2% after a report from The Information said the company had cut AI-related software sales quotas after many reps missed targets. The stock later trimmed its losses after Microsoft denied lowering quotas for its salespeople, but the damage to sentiment was already done. Other big AI names moved lower in sympathy: Nvidia was slightly in the red, Broadcom lost more than 1%, and Micron also dropped over 1%.

“The market is starting to separate the winners from the losers,” said Scott Welch, chief investment officer at Certuity, on CNBC. “They’re all investing in each other, and the market hasn’t seen the results yet. We’re at the very beginning of a transformational market, and we’re watching how much debt they’re taking on to fund data centers and everything that comes with AI.”

On the macro side, traders were more focused on what the latest jobs data might mean for the Federal Reserve. Payrolls firm ADP reported that private payrolls fell by 32,000 in November, a surprise decline versus expectations for a 40,000 gain. Instead of panicking, markets largely took it as one more reason for the Fed to cut interest rates next week to support a cooling economy.

“The labor market, that’s what people are going to focus on,” Welch said. “The numbers will come in as they come in, and it’ll either lead toward a cut or not, but I suspect there’s no question there will be a cut next week.”

Futures markets agree: traders are pricing in roughly an 89% chance of a rate cut at the Fed’s meeting, up sharply from mid-November, according to the CME FedWatch tool. As Welch put it:

“The market is hinged on the Fed, and so if they don’t cut, it’s not going to turn out well.”

There were also signs the broader economy isn’t falling off a cliff. Fresh US services data came in slightly better than expected, suggesting activity in that key sector is holding up. And there were bright spots in individual names: Bitcoin traded back above $92,000 after its worst day since March, Marvell Technology gained more than 3% on upbeat data center growth projections, and American Eagle Outfitters surged more than 14% after raising its full-year forecast and saying the holiday shopping season is off to a strong start.

In short: a softer labor market, some AI jitters and a wobbly Microsoft made for a choppy session — but growing confidence in a Fed rate cut kept the Dow in the green by the closing bell.