It was a dizzying end of the week for market participants. Stocks had a slow start Friday thanks to a good-news-is-bad-news jobs report. However, the main indexes eventually turned tail and rallied hard on the back of well-received earnings from a pair of Big Tech giants.
Ahead of Friday’s open, the Bureau of Labor Statistics said the U.S. added 353,000 new jobs in January, blowing past the 185,000 economists were expecting. Both the unemployment rate (3.7%) and participation rate (62.5%) were unchanged vs December, while average hourly earnings were up 0.6% month-over-month and 4.5% year-over-year.
The January jobs report is “crushing all the best-laid plans for a smooth path to Fed rate relief,” says Douglas Porter, chief economist at BMO Capital Markets. And while Porter is “always cautious about reading too much into January economic stats,” he notes that “there is little doubt that the U.S. economy retains much more momentum than almost anyone anticipated.”
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And with the labor market still tight, market expectations for a March rate cut have dropped to 21% from 38% one day ago, according to CME Group’s FedWatch Tool.
Meanwhile, Big Tech earnings gave folks plenty to buzz about too. Most notable were results from Facebook parent Meta Platforms (META). In addition to reporting higher-than-expected earnings of $5.33 per share on $40.1 billion in revenue, the company said it will start paying a quarterly dividend of 50 cents per share and increased its stock buyback program by $50 billion.
“The dividend is a very big statement,” says Anthony Denier, CEO of Webull, a commission-free trading platform. “It confirms the business is a cash cow and it expresses confidence in its cash flow. Also, paying a dividend opens the stock up to a lot of new investors who only invest in dividend stocks.”
Additionally, the company said it will spend up to $37 billion this year on investments aimed at boosting its tech infrastructure to support additional artificial intelligence (AI) initiatives.
These impressive results capped off what Meta CEO Mark Zuckerberg called a “year of efficiency” for the firm, which included cutting more than a fifth of its global workforce. They also sent META stock soaring 20.3% today – adding $204 billion in market value along the way. This is the biggest single-day gain in market value ever for a U.S. stock, according to Bloomberg. It’s also equivalent to the entire market value of Dow Jones stock Cisco Systems (CSCO, 0.00%).
Amazon pops post-earnings
Fellow Magnificent 7 stock Amazon.com (AMZN) also popped after earnings, gaining 7.9% thanks to its top- and bottom-line beats.
Apple (AAPL), on the other hand, slipped 0.5% after its fiscal first-quarter results showed sales in China were down 13% vs the year prior. This is the only region that saw a year-over-year decline in sales.
As for the main indexes, the Nasdaq Composite closed up 1.7% at 15,628, the S&P 500 added 1.1% to 4,958, and the Dow Jones Industrial Average gained 0.4% to 38,654.
