January Jobs Report
February 2, 2024
US equities are mixed after mostly better earnings and a hotter-than-expected January Jobs report. The market-based probability for a March cut fall to ~24% from ~40% yesterday, and May falls to ~65% from ~92%. At this week’s press conference, Powell said disinflation could continue even against a strong labor backdrop. The Fed Chair has an opportunity to update the message during a ’60 Minutes’ interview this Sunday.
Today’s uptick in the S&P 500 (SPX) and Nasdaq 100 (NDX) follow strong overnight earnings report with the backup in yields quelling some optimism. The Russell 2000 (RTY) and equal-weight S&P 500 (SPW) are both lower on the day. China headlines continue to sound rather gloomy with the IMF issuing a downbeat GDP forecast of 4.6% this year and 4% in 2025. Reports also suggest that banks have been reluctant to increase lending to the property sector despite government pressure to do so. Other notable earnings-driven outperformers include CLX and CVX, while CHTR, EMN, GEN, LYB, MCHP and TEAM trade lower after reporting.
The AI-exposed semi names like AMD and NVDA should benefit from the higher capex outlooks from META and AMZN as it follows bullish updates from MSFT and GOOGL earlier in the week. Consumption based software stocks should also benefit from the reacceleration in AWS growth with DDOG, SNOW and MDB top of mind.