Wall Street indexes lost steam on Wednesday following a renewed selloff in software stocks, while investors assessed stronger-than-expected employment data that lowered the bets on Federal Reserve interest-rate cuts.

The three main indexes started the session on a strong note, with the S&P 500 and the Nasdaq hitting their highest level in more than a week after data showed stability in the labor market as U.S. job growth accelerated in January and the unemployment rate fell to 4.3%.

However, while most gains fizzled out as markets dialed back on bets, the first 25-basis-point cut is still expected in June, according to CME Group’s FedWatch tool.

“The expectations are very high and we’re trying to thread a needle between the economy staying glued together, where we continue to have robust GDP growth but at the same time be able to ease interest rates, which a lot of parts of the market would like to see,” said Mel Casey, senior portfolio manager at FBB Capital Partners.

“The initial reaction was excellent and then… (markets) suddenly realized if the job number is that strong, maybe we’re not going to see the next Fed chair cut rates anytime soon.”

The inflation report due on Friday could further alter expectations for the Fed’s rate path.

Major Markets Mixed

At 11:46 a.m. the Dow Jones Industrial Average rose 44.35 points, or 0.09%, to 50,232.49, the S&P 500 gained 8.56 points, or 0.12%, to 6,950.37, and the Nasdaq Composite dropped 55.31 points, or 0.24%, to 23,047.16.

Software stocks tumbled again after rebounding in the previous few sessions from last week’s tech rout as AI-fueled disruption remained a major concern, with markets quick to punish sectors perceived to be risky.

ServiceNow <NOW.N>, Datadog and Salesforce dropped between 4.2% and 6%. Intuit lost 6.4%, while the S&P 500 software index shed 3%.

Brokerage firms that slid on Tuesday after startup Altruist announced AI-enabled tax-planning features extended declines, with Charles Schwab falling 2.2%. LPL Financial and Ameriprise Financial fell about 2% each.

Alphabet, Microsoft Fall

The communication services index was lower, weighed by a 2.1% decline in Alphabet, while Microsoft fell 2.6%.

Rate-sensitive financials were lower, with Citigroup, Morgan Stanley and Bank of America down between 1.1% and 2.1%. The small-cap Russell 2000 index fell 0.7%.

Generac topped the S&P 500 with a 17% gain after its fourth-quarter results, as earnings season continued to hold investor attention.

Robinhood shares dropped 12.3% after the retail brokerage missed fourth-quarter revenue expectations.

T-Mobile gained 2.1% following its fourth-quarter results.

Humana slid 2% after the health insurer forecast 2026 profit below Wall Street estimates. Moderna fell 6.7% after the U.S. Food and Drug Administration decided not to review the company’s application for approval of its influenza vaccine.

Declining issues outnumbered advancers by a 1.07-to-1 ratio on the NYSE, and by a 1.95-to-1 ratio on the Nasdaq.

The S&P 500 posted 92 new 52-week highs and 23 new lows, while the Nasdaq Composite recorded 108 new highs and 186 new lows.

—

(Reporting by Twesha Dikshit and Purvi Agarwal in Bengaluru; Editing by Pooja Desai and Shilpi Majumdar)