Company / Analytics

Week 05 in Brief

North America

U.S. stocks closed higher Friday, boosted by stronger-than-expected January jobs report that underlined expectations for an aggressive round of rate increases by the Federal Reserve and strong earnings results from Amazon.com.

How did the major indices perform?

• The Dow Jones Industrial Average fell 21.42 points, or almost 0.1%, to close at 35,089.74, after climbing into positive territory in afternoon trade.
• The S&P 500 gained 23.09 points, or 0.5%, to end at 4,500.53, after flipping between modest gains and losses in morning action.
• The Nasdaq Composite climbed 219.19 points, or 1.6%, to finish at 14,098.01.
• For the week, the Dow gained about 1.1%, the S&P 500 rose 1.6% and the Nasdaq climbed 2.4%. Each index notched a second straight week of gains, according to Dow Jones Market Data.

What drove the US market?

• Employment Data: Trading was choppy after the government reported Friday that the U.S. economy added 467,000 jobs in January and hiring was much stronger at the end of 2021 than originally estimated. The unemployment rose 4% from 3.9%, while the percentage of people in the labor force rose to a pandemic high of 62.2%. Analsysts had estimate a payrolls rise of just 150,000 — and some had warned that a fall was possible due to hourly workers without paid sick leave being counted as without jobs. Investors were prepared for a weaker number on, on expectations for a sharp reversal in February. The strong January reading thus served to reinforce expectations the Federal Reserve will be aggressive in lifting interest rates and taking other steps to pullback on monetary stimulus as it attempt to rein in the highest inflation in decades.
• Corporate Earnings: Positive news came from Apple Amazon.com whose shares soared 13.5% Friday, buoying the Nasdaq after the e-commerce giant delivered blowout results late Thursday. Some $11.8 billion of the $14.3 billion Q4 profit reported came from an investment in Rivian Automotive, which went public in the quarter. The company also raised the cost of a Prime subscription to $139 a year from $119 a year.

Which US stocks were in focus Friday?

• Amazon’s performance saw the S&P 500’s consumer discretionary sector leading gains Friday, up 3.7%. In other sharp gains, financials closed 1.7% higher, while the energy sector rose 1.6%. The S&P 500, tech-heavy Nasdaq and Dow all scored weekly gains, after breaking a four-session string of wins on Thursday.
• Meanwhile, the big dip came after Facebook parent Meta Platforms Inc. missed sales and growth estimates, sending shares plunging. Facebook lost 25% of its valuation on Thursday, and shares continued to slip (down 0.3%) Friday.
• Pinterest reported its full-year profit and more than $2 billion in annual revenue and shares of the online-pinboard company climbed 11.2%, to close at $27.25.
• Bill.com Holdings shares surged about 36%, after the maker of financial software tools for small businesses topped expectations for its latest quarter and gave an upbeat forecast.
• Shares of GoPro rose 4%, after the action-camera maker topped earnings expectations, with plans to broaden camera offerings in the year ahead.
• Ford Motor Co. swung to a quarterly profit, but along with sales, fell short of Wall Street expectations amid “persistent supply-chain disruptions.” Shares dropped 9.7%, closing at $17.96.
• Shares of Snapchat parent Snap surged 58.8%, after reporting its first-ever profit late Thursday. Snap closed at $38.91.

How did the European markets perform?

• European stocks closed lower on Friday as investors digested key updates from both the Bank of England and the European Central Bank the previous day, and reacting to the monthly non-farm payrolls data from the U.S.
• The pan-European Stoxx 600 provisionally closed 1.42% down, with only the oil and gas sector in positive territory.
• Autos stocks led losses, shedding 3.34%. New data on Friday revealed that new car sales in the U.K. last month were 23% lower than pre-pandemic levels.
• On Thursday, the European Central Bank kept interest rates unchanged in spite of record inflation levels across the eurozone. However, the Bank of England hiked rates in its first back-to-back interest rates rise since 2004. Major European bourses, including the French CAC index and Germany’s DAX, dipped into negative territory on Friday, with the German index shedding 1.8%.
• The ECB resisted pressure to raise rates at a time of unprecedented inflation, with the most recent reading hitting a record 5.1% last month. Christine Lagarde, the central bank’s president, said on Thursday that although inflation was likely to remain elevated for longer than previously thought, the ECB expected it to ease throughout 2022.
• Investors are also weighing up fresh economic data out of the continent. Retail sales in the euro zone saw a month-on-month decline of 3% in December, but gained 2% from a year earlier.
• German industrial orders grew 2.8% in December from a month earlier, data showed on Friday, whereas France saw its industrial output contract by 0.2% between November and December.

How did Asian markets perform?

• Asian equities held firm overnight after better-than-expected earnings from Amazon. The Hang Seng Index climbed 3.2% Friday for a weekly gain of 4.3%, while the Nikkei 225 rose 0.7% to bring weekly gains to 2.7%.
• MSCI’s gauge of stocks across the globe gained 0.77%.

Commodities and Bonds

• Oil prices surged to fresh seven-year highs on Friday, heading for a seventh straight weekly increase, built on ongoing worries about supply disruptions fueled by frigid U.S. weather and ongoing political turmoil among major world producers.
• US WTI Crude, the U.S. oil benchmark, jumped to over $92 per barrel early on Friday—its highest level since 2014. WTI broke this week the $90 a barrel mark for the first time since 2014 and continued to rally early on Friday.
• Meanwhile, Brent Crude was close to breaking $93 a barrel, trading up 2.00% at $92.93.
• Gold’s April futures contract edged up 0.2% to settle at $1,807.80 an ounce
• The yield on the 10-year Treasury note surged 10.5 basis points to 1.93%, a level last seen in late 2019. Yields and debt prices move opposite each other.

Currencies

• The ICE U.S. dollar index rose 0.111%, with the euro up 0.09% to $1.1448.
• The cryptocurrency bitcoin has strengthened in the past week but, at just under $38,000, remains far below the all-time high of $69,000 it hit last November.

Next Week

• Investors will digest economic data from across the world, including jobs data and consumer prrice index (CPI) measures.
• Pfizer, Disney, CVS, Coca-Cola, Pepsico, Uber, Coinbase, Take-Two Interactive, Chipotle Mexican Grill, Twitter, Coupang, and more will report quarterly earnings.