Loi used these steps to simplify the expression (StartFraction (x cubed) (y Superscript negative 12 Baseline) Over 2 (x Superscript negative 3 Baseline) (y Superscript negative 3 Baseline) EndFraction) Superscript negative 2.

Step 1:
Subtract the exponents of powers with like bases.
(StartFraction x Superscript 6 baseline y Over 2 EndFraction) Superscript negative 2
Step 2:
Apply the power of a product rule.
StartFraction x Superscript negative 12 Baseline y Superscript negative 2 Baseline Over 2 Superscript negative 2 Baseline EndFraction
Step 3:
Write negative exponents as reciprocals using positive exponents.
StartFraction 1 Over 2 squared x Superscript 12 Baseline y squared EndFraction
Step 4:
Evaluate the power with the integer base.
StartFraction 1 Over 4 x Superscript 12 Baseline y squared EndFraction

In which step did Loi make the first error?
Step 1
Step 2
Step 3
Step 4