Stocks up on Tech Earnings, Jobs Report beats Estimates

The Dow (+1.4%), NASDAQ (+1.1%) and S&P 500 (+1.4%) each gained nicely for the week, with the S&P 500 expanding on new highs from the prior week.  Meanwhile, tax-free municipal bonds were also up around 1% for the week and taxable bonds ranged from 0.1% - 0.6%.  The yield on the 10-year Treasury bond fell .12%, finishing the week at 4.03%.

Last week the Federal Reserve Committee met on Wednesday, with the main highlight being Chairman Powell pretty blatantly stating that the bond market’s anticipated interest rate cut in March 2024 was premature. This statement was given based on the inflation data, which has not cooled as much by now as they would like to have seen. Powell and the committee are interested in seeing inflation continue to cool for a longer period of time before they begin to consider cutting rates.  

Last week was the busiest of earnings season, with 106 of the S&P 500 companies reporting. This past week we saw big tech names such as Microsoft, Amazon, and Meta (formerly Facebook) report robust earnings which helped continue to propel markets upward. Even with companies reporting cautious outlooks, investors seem unconcerned and are continuing to buy into the market. We still have over 50% of companies yet to report their Q4 earnings, so we will be keeping a close eye on both how they performed and their outlooks for 2024.  

On Friday, the US Labor Report was released showing that the economy added 353,000 jobs in January, and a revision was made for December as well, increasing jobs added from 216,000 to 333,000. This far exceeded estimates and sent the stock markets upward. While Chairman Powell has noted that the Fed no longer thinks labor needs to weaken to drive down inflation, the wage growth (4.5% in January) continues to pose as an obstacle for inflation to weaken.

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