The S&P 500 notched a fresh record high on Friday as quarterly results from technology companies including Facebook-parent Meta topped expectations and the January jobs report came in much better than expected.
The rise in tech stocks helped shift investor focus from a scorching jobs report earlier on Friday that spiked interest rates. The benchmark 10-year Treasury yield jumped a whopping 17 basis points to 4.02 per cent after the government reported the U.S. economy added 353,000 jobs in January, well above the Dow Jones estimate from economists of 185,000. (1 basis point equals 0.01 per cent.)
The report also included inflationary data in the form of greater-than-expected wage growth. Wages expanded by 4.5 per cent year over year, more than a 4.1 per cent forecast. This report and comments from Fed Chair Jerome Powell on Wednesday likely pushes the chances of a rate cut back to May or the second half of the year.
But investors instead focused on the resiliency of the economy and how that would keep boosting profits.
The broad market index added 1.1 per cent to close at 4,958.61, above its previous record close of 4,927.93 reached on Monday. The Dow Jones Industrial Average added 134.58 points, or 0.4 per cent, to 38,654.42, also a record close. The Nasdaq Composite climbed 1.7 per cent to 15,628.95.
Shares of Meta popped more than 20 per cent after the social-media giant’s quarterly results topped analysts’ expectations. The Facebook-parent also announced it will pay a quarterly dividend for the first time, and it authorised a $50 billion share buyback program. Amazon shares jumped 7.9 per cent on a fourth-quarter earnings beat.
The regional bank slide halted on Friday as the SPDR S&P Regional Bank ETF (KRE) rose by 0.4 per cent, reducing its weekly losses to approximately 7.2 per cent. New York Community Bancorp's shares also rebounded by over 4 per cent on Friday, despite being down more than 40 per cent for the week, following concerns about commercial real estate loans impacting bank earnings.
For the week, the S&P 500 added 1.4 per cent, the Nasdaq Composite gained 1.1 per cent and the Dow rose 1.4 per cent. It was the fourth week in a row of gains for the major benchmarks after a stumble to start 2024.
Along with surging rates, the market shook off a tepid Apple quarter. The shares sat out the Friday rally and closed essentially flat after the iPhone juggernaut posted a 13 per cent sales decline in China.
Overall, US sectors were mixed on Friday. Communication Services was the best performer, closing almost 5 per cent higher. Utilities was the worst performer.
Shifting to the Australian landscape, the Reserve Bank of Australia is expected to keep interest rates unchanged in its upcoming meeting due to ongoing domestic price pressures, with a potential rate cut not anticipated until 2025 or late 2024 if inflation and unemployment data warrant it. Michelle Bullock's post-meeting press conference will be closely watched for any shifts in the RBA's stance, as the focus shifts away from rate hikes towards the possibility of future cuts.
Futures
The SPI futures are pointing to a 0.7 per cent fall.
Currency
One Australian dollar at 7.20am was buying 65.15 US cents.
Commodities
Gold lost 0.84 per cent. Silver dropped 1.89 per cent. Copper fell 0.83 per cent. Oil lost 2.09 per cent.
Figures around the globe
European markets closed mixed. London’s FTSE fell 0.09 per cent, Frankfurt added 0.35 per cent, and Paris closed 0.05 per cent higher.
Turning to Asian markets, Tokyo’s Nikkei added 0.41 per cent, Hong Kong’s Hang Seng fell 0.21 per cent and China’s Shanghai Composite fell 1.46 per cent lower.
On Friday, the Australian share market closed 1.47 per cent higher at 7,699.40.
Ex-dividends
AMCIL Limited (ASX:AMH) is paying 1 cent fully franked
BKI Investment Ltd (ASX:BKI) is paying 3.85 cents fully franked
Qualitas Re Income (ASX:QRI) is paying 1.22 cents unfranked
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
Disclaimer
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