This week was filled with a combination of positive and negative news for investors. On the one hand, the U.S. economy added a jaw-dropping 517,000 jobs in January, well above economists’ expectations for 189,000 new jobs.[0] The unemployment rate also declined to 3.4%, its lowest level since 1969.[1] The news has many speculating that the Fed may be more likely to raise interest rates to its forecast 5.25% for the top end of its fed funds target rate range.[2]
On the other hand, a slew of major companies reported earnings which largely disappointed investors. Amazon (AMZN) slightly missed its earnings expectations, while Apple (AAPL) and Alphabet (GOOGL) both failed to meet their revenue forecasts. That being said, there were also some bright spots, with Meta (META) and GM (GM) both reporting stellar results.[3]
The market responded to the news with volatility, with the Dow Jones Industrial Average (DJI) falling 128 points, or 0.4%, to 33,926.[4] The S&P 500 (SP500) lost 43.3 points or 1%, to 4,136.5, and the Nasdaq Composite (COMP.IND) dipped 193.9 points or 1.6% to 12,007.[5] The 10-year Treasury yield (US10Y) rose 12 basis points to 3.52%.[6]
This week is expected to remain volatile, with a heavy load of Fed speeches, Treasury auctions, and earnings reports to parse through.[7] Fed Chair Jerome Powell is scheduled to speak at midday in Washington on Tuesday, while Walt Disney (DIS), Uber Technologies (UBER), PayPal (PYPL), and PepsiCo (PEP) will all report their earnings results.[4] In the commodities markets, crude oil futures edged higher, while gold futures rose 0.4% to $1,883.50/oz.[8]
For forex traders, the jobs report complicates the Fed’s efforts to bring down inflation by aggressively hiking interest rates.[1] Trading foreign currency on margin with leverage carries a high degree of risk and may not be appropriate for all investors. It is recommended that you think carefully about whether trading is suitable for you, depending on your individual situation.[9] Trading in the Forex market carries Deposits may be exceeded by losses.[9] It is advised that you seek professional counsel and make sure you are fully aware of the risks associated with trading before participating.[9]
0. “Stocks fall on Friday, but S&P 500 notches winning week as strong 2023 continues” CNBC, 3 Feb. 2023, https://www.cnbc.com/2023/02/02/stock-futures-fall-after-earnings-reports-from-apple-alphabet-disappoint-investors.html
1. “Stock Market Today: Stocks Drop After Bleak Big Tech Earnings, Jobs Shocker” Kiplinger’s Personal Finance, 3 Feb. 2023, https://www.kiplinger.com/investing/stocks/stock-market-today-020323-stocks-drop-after-bleak-big-tech-earnings-jobs-shocker
2. “Dow Jones Reverses Ahead Of Fed Meeting; Caterpillar, Exxon, Pfizer Fall On Earnings” Investor’s Business Daily, 31 Jan. 2023, https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-fall-ahead-of-fed-meeting-caterpillar-exxon-pfizer-mcdonalds-report-earnings
3. “S&P 500 posts 1.6% weekly gain after Fed meet” Seeking Alpha, 3 Feb. 2023, https://seekingalpha.com/news/3932078-sp-500-posts-16-weekly-gain-after-fed-meet
4. “Caution Today, Powell Tomorrow as This Week’s Q4 Reports Deliver Disney, PepsiCo and Uber – Ticker Tape” The Ticker Tape, 6 Feb. 2023, https://tickertape.tdameritrade.com/market-news/caution-today-powell-tomorrow-as-this-week-s-q4-reports-deliver-disney-pepsico-and-uber-19386
5. “Dow futures trade lower, earnings in focus By Investing.com” Investing.com, 5 Feb. 2023, https://www.investing.com/news/stock-market-news/dow-futures-trade-lower-earnings-in-focus-2995587
6. “Stock Market Turns Lower After Strong Jobs Report; Apple Stock Reverses Higher Despite Sluggish Quarter” Investor’s Business Daily, 3 Feb. 2023, https://www.investors.com/market-trend/stock-market-today/stock-market-takes-heat-blowout-jobs-report-apple-google-amzn-qcom-earnings/
7. “Stock Market News Today: Futures Down on Solid Jobs Report and Fed Speech Ahead” msnNOW, 6 Feb. 2023, https://www.msn.com/en-us/money/markets/stock-market-news-today-futures-down-on-solid-jobs-report-and-fed-speech-ahead/ar-AA179VsW
8. “Dow futures fall 200 pts; Dell in focus following report of job cuts” Yahoo Finance, 6 Feb. 2023, https://finance.yahoo.com/news/dow-futures-fall-200-pts-070412737.html
9. “Dow’s Skepticism Anchors Nasdaq Volatility, Dollar Charged by NFPs and Rate Forecasts” DailyFX, 3 Feb. 2023, https://www.dailyfx.com/news/dow-s-skepticism-anchors-nasdaq-volatility-dollar-charged-by-nfps-and-rate-forecasts-20230203.html