Broader Market Gains on Blowout Earnings from Amazon and Meta Platforms

What you need to know…

The S&P 500 Index ($SPX) (SPY) today is up +0.60%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.08%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.22%.

Stock indexes this morning are mixed, with the S&P 500 climbing to a new record high.  Blowout earnings results from Meta Platforms and Amazon.com are leading a rally in technology stocks and the broader market.  Weighing on the Dow Jones Industrials is a -3% fall in Intel on worries over its capital expenditure plans and a -1% decline in Apple after it reported weaker-than-expected revenue growth in China.

Limiting gains in the overall market is a sharp jump in bond yields today on a stronger-than-expected U.S. Jan unemployment report that showed payrolls rising by the most in a year and wages climbing more than expected. The report shows a resilient U.S. labor market and pared market expectations for Fed rate cuts.

U.S. Jan nonfarm payrolls jumped +353,000, much stronger than expectations of +185,000 and the biggest increase in a year.  Also, Dec nonfarm payrolls were revised up sharply to +333,000 from the initially reported +216,000.  The Jan unemployment rate was unchanged at 3.7%, showing a stronger labor market than expectations of an increase to 3.8%.

U.S. Jan average hourly earnings rose +0.6% m/m and +4.5% y/y, stronger than expectations of +0.3% m/m and +4.1% y/y.

The markets are discounting the chances for a -25 bp rate cut at 23% at the March 19-20 FOMC meeting and 88% for that -25 bp rate cut at the following meeting April 30-May 1.

U.S. and European government bond yields today are higher.  The 10-year T-note is up +15.1 bp at 4.031%. The 10-year German bund yield is up +9.5 bp at 2.244%.  The 10-year UK gilt yield is up +17.7 bp at 3.923%.  

Overseas stock markets are mixed.  The Euro Stoxx 50 is up +0.37%.  China’s Shanghai Composite Index closed down -1.46%.  Japan’s Nikkei Stock Index closed up +0.41%.

Today’s stock movers…

Meta Platforms (META) is up more than +19% to lead gainers in the S&P 500 and Nasdaq 100 after reporting Q4 revenue of $40.11 billion, above the consensus of $39.01 billion, and forecast Q1 revenue of $34.5 billion-$37 billion, better than the consensus of $33.64 billion. 

Amazon.com (AMZN) is up more than +6% after reporting Q4 net sales of $169.96 billion, stronger than the consensus of $166.21 billion.   

Edwards Lifesciences (EW) is up more than +5% after Wells Fargo Securities upgraded the stock to overweight from equal weight with a price target of $94.

Cigna Group (CI) is up more than +5% after reporting Q4 adjusted revenue of $51.15 billion, better than the consensus of $48.89 billion, and forecasting full-year adjusted revenue of at least $235.00 billion, above the consensus of $228.24 billion. 

Hartford Financial Services (HIG) is up more than +4% after reporting Q4 core EPS of $3.06, well above the consensus of $2.40. 

Clorox (CLX) is up more than +3% after reporting  Q2 adjusted EPS of $2.16, well above the consensus of $1.09, and raised its full-year adjusted EPS estimate to $5.30-$5.50 from a previous estimate of $4.30-$4.80. 

WW Grainger (GWW) is up more than +3% after forecasting 2024 EPS of $38-$40.50, the midpoint above the consensus of $38.61. 

Chevron (CVX) is up more than +2% to lead gainers in the Dow Jones Industrials after reporting Q4 adjusted EPS of $3.35, stronger than the consensus of $3.22, and raised its quarterly dividend by 7.9% to $1.63 per share from $1.51 per share. 

Gen Digital (GEN) is down more than -19% to lead losers in the S&P 500 in pre-market trading after reporting Q3 adjusted RPS  of 49 cents, below the consensus of 50 cents, and forecast full-year adjusted EPS of $1.95-$1.97, weaker than the consensus of $2.00. 

Atlassian (TEAM) tumbled more than -13% to lead losers in the Nasdaq 100 after reporting Q2 cloud revenue grew 26.5%, below the consensus of 26.6%. 

Charter Communications (CHTR) is down more than -12% after reporting Q4 adjusted Ebitda of $5.60 billion, below the consensus of $5.61 billion, and said it lost 61,000 internet customers in Q4 versus a gain of 105,000 a year earlier. 

Intel (INTC) is down more than -3% to lead losers in the Dow Jones Industrials after a Wall Street Journal report said the company is delaying a $20 billion chip facility planned for Ohio, sparking worries over its capital expenditure plans. 

Skechers USA (SKX) is down more than -6% after reporting Q4 net sales of $1.96 billion, below the consensus of $2.04 billion, and forecast full-year sales of $8.60 billion-$8.80 billion, weaker than the consensus of $8.93 billion. 

Eastman Chemical (EMN) is down more than -3% after the company pointed to an uncertain outlook for growth across most end markets in an earnings call.

Apple (AAPL) is down more than -1% despite reporting better than expected Q1 EPS after reporting Q1 greater China revenue of $20.82 billion, weaker than the consensus of $23.5 billion. 

Microchip Technology (MCHP) is down more than -1% after forecasting Q4 net sales of $1.23 billion-$1.43 billion, below the consensus of $1.67 billion. 

Across the markets…

March 10-year T-notes (ZNH24) this morning are down sharply by -1-7/32 points, and the 10-year T-note yield is up +15.1 bp at 4.031%.  Mar T-note prices tumbled this morning on the stronger-than-expected U.S. Jan payroll report that showed nonfarm payrolls rose by the most in a year and age growth accelerated as Jan average hourly earnings rose more than expected, hawkish factors for Fed policy.  Better-than-expected earnings results from Amazon and Meta Platforms boosted stocks today and reduced safe-haven demand for T-notes. 

The dollar index (DXY00) today is up by +0.70%.  The dollar this morning recovered from a 1-week low and jumped to a 1-1/2 month high as bond yields surged on the stronger-than-expected U.S. Jan payroll report.  The report shows strength in the labor market that is hawkish for Fed policy and pushed back expectations for Fed rate cuts.   

EUR/USD (^EURUSD) is down by -0.63%.  The euro today retreated from a 1-week high and is posting moderate losses after the stronger-than-expected U.S. Jan payroll report pushed the dollar higher.  The euro today initially moved high on a stronger-than-expected manufacturing production report from France. 

France Dec manufacturing production rose +1.2% m/m, stronger than expectations of +0.2% m/m and the biggest increase in 7 months.

Swaps are pricing in the chances for a -25 bp rate cut by the ECB at 15% for its next meeting on March 7 and at 72% for the following meeting on April 11.

USD/JPY (^USDJPY) is up by +0.96%.  The yen tumbled against the dollar today as T-note yields surged on the stronger-than-expected U.S. Jan payrolls report.  Weakness in Japanese government bond yields also weighed on the yen after the 10-year JGB bond yield today fell to a 1-1/2 week low of 0.665%. 

Swaps are pricing in the chances for a +10 bp rate increase by the BOJ at 20% for its next meeting on March 19 and at 74% for the following meeting on April 26.

April gold (GCJ24) this morning is down -22.6 (-1.09%), and Mar silver (SIH24) is down -0.571 (-2.46%).  Gold and silver prices this morning are under pressure, with silver falling to a 1-week low. Today’s stronger-than-expected U.S. Jan payroll report pushed the dollar and global bond yields higher, undercutting metals prices.  Today’s U.S. payroll report shows strength in the labor market that has pushed back expectations for Fed rate cuts, a bearish factor for precious metals.  Gold is also weighed down from ongoing long liquidation of gold by funds after long gold holdings in ETFs fell to a 4-year low Thursday. 

• Amazon Stock Eyes New All-Time Highs as ‘Silent’ Year of Efficiency Pays Off
• Markets Today: Stocks Higher on Strong Tech Earnings Despite Hot Payroll Report
• Dividend Defense: 3 Recession-Proof Utility Stocks to Snag Before They Surge
• Nasdaq Futures Climb on Upbeat Meta and Amazon Results, U.S. Jobs Report Looms