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Market Snapshot

https://www.briefing.com/stock-market-update

Dow 35089.74 -21.42 (-0.06%)
Nasdaq 14098.00 +219.19 (1.58%)
SP 500 4500.53 +23.09 (0.52%)
10-yr Note -6/32 1.903
NYSE Adv 1431 Dec 1753 Vol 943.8 mln
Nasdaq Adv 2752 Dec 1599 Vol 4.0 bln

Industry Watch
Strong: Consumer Discretionary, Energy, Financials
Weak: Materials, Industrials, Real Estate, Utilities

Moving the Market

-- January employment report showed surprisingly strong jobs growth and higher-than-expected wage gains

-- Amazon.com (AMZN) and Snap (SNAP) provide investors a huge relief with earnings news

-- Increased expectations for the Fed to hike rates by 50 basis points in March

-- Treasury yields rise and oil prices top $92 per barrel

S&P 500 closes higher amid dueling trading narratives
04-Feb-22 16:20 ET
Dow -21.42 at 35089.74, Nasdaq +219.19 at 14098.00, S&P +23.09 at 4500.53

[BRIEFING.COM] The S&P 500 gained 0.5% on Friday in a session featuring earnings relief from Amazon.com (AMZN 3152.79, +375.88, +13.5%) and Snap (SNAP 38.75, +14.25, +58.2%), a surprising January employment report, rising Treasury yields, and uncomfortably high oil prices ($92.30/bbl, +2.08, +2.3%).

The Russell 2000 (+0.6%) kept pace with the benchmark index while the Nasdaq Composite (+1.6%) outperformed and the Dow Jones Industrial Average (-0.1%) closed lower. The market was contending with dueling trading narratives throughout the day.

The first trading narrative was that the bullish earnings reactions in Amazon and Snap suggested that Meta Platform's (FB 237.09, -0.67, -0.3%) earnings disappointment was more a company-specific issue. AMZN shares rose 13.5%, and SNAP shares rose nearly 60.0%.

Amazon carried the S&P 500 consumer discretionary sector (+3.7%) to the top of the sector leaderboard. The financials (+1.7%) and energy (+1.6%) sectors followed suit, while the materials (-1.7%), consumer staples (-1.2%), and industrials (-1.1%) sectors were among six sectors that closed lower.

The second trading narrative was that the January employment report, which included surprisingly strong jobs growth and higher-than-expected wage gains, would force the Fed to be even more aggressive with rate hikes. That could explain the mixed sector performances, as well as the 0.1% decline in the S&P 500 Equal Weight Index.

Specifying the jobs data, nonfarm payrolls increased by 467,000 (Briefing.com consensus 180,000), and private sector payrolls increased by 444,000 (Briefing.com consensus 160,000), which caught many people off guard given the disappointing ADP Employment Change report earlier in the week. December payrolls growth saw sizable upwards revisions.

In addition, the labor force participation rate increased to 62.2% from 61.9% in December, and average hourly earnings increased 0.7% (Briefing.com consensus 0.5%). The unemployment rate was 4.0% (Briefing.com consensus 3.9%), versus 3.9% in December.

Accordingly, the 2-yr yield rose 13 basis points to 1.32%, and the 10-yr yield rose ten basis points to 1.93%. The U.S. Dollar Index increased 0.1% to 95.44. Regarding the Fed's policy meeting in March, the CME FedWatch Tool increased the probability for a 50-basis-point rate hike in that meeting to 36.6% from 14.3% yesterday.

In other earnings news, Pinterest (PINS 27.25, +2.74, +11.2%) was another company that provided better-than-feared earnings results, while Ford Motor (F 17.96, -1.93, -9.7%) and Clorox (CLX 141.41, -23.93, -14.5%) disappointed shareholders with a pair of EPS misses.

Reviewing the Employment Situation report in more depth:

January payrolls were not only strong, they were accompanied by large upward revisions to the payrolls data for December and November. The January employment report was also accompanied by a big pickup in the year-over-year change in average hourly earnings and a nice uptick in the labor force participation rate.
January nonfarm payrolls increased by 467,000 (Briefing.com consensus 180,000). December nonfarm payrolls revised to 510,000 from 199,000.
January private sector payrolls increased by 444,000 (Briefing.com consensus 160,000). December private sector payrolls revised to 503,000 from 211,000.
January unemployment rate was 4.0% (Briefing.com consensus 3.9%), versus 3.9% in December.
January average hourly earnings increased 0.7% (Briefing.com consensus 0.5%) versus a downwardly revised 0.5% increase (from 0.6%) in December.
The average workweek in January was 34.5 hours (Briefing.com consensus 34.7), versus 34.7 hours in December.
The labor force participation rate increased to 62.2% from 61.9% in December.
The employment-population ratio rose to 59.7% from 59.5% in December.
The key takeaway from the report is that it will inflame concerns about the Fed being behind the curve in fighting inflation.

Looking ahead, investors will receive Consumer Credit for December on Monday.

Dow Jones Industrial Average -3.4% YTD
S&P 500 -5.6% YTD
Nasdaq Composite -9.9% YTD
Russell 2000 -10.8% YTD

Crude futures settle above $92 per barrel
04-Feb-22 15:30 ET
Dow +185.49 at 35296.65, Nasdaq +311.59 at 14190.40, S&P +53.91 at 4531.35

[BRIEFING.COM] The S&P 500 is up 1.3% as the market continues to push higher with no specific catalyst behind the recent move.

One last look at the sectors shows mixed results. The consumer discretionary (+4.7%), financials (+2.4%), and energy (+2.3%) sectors are up between 2-5%, while the consumer staples (-0.7%), materials (-0.9%), and industrials (-0.4%) sectors underperform in the red.

WTI crude futures settled higher by 2.3%, or $2.08, to $92.30/bbl.