Key Takeaways

  • Megacap stocks propel US indexes to record-breaking highs. 
  • Better-than-expected January jobs report further supports the S&P 500 and its peers.
  • The Federal Reserve holds rates steady for its fourth consecutive round.

Market Performance

In an action-packed week for indexes, the S&P 500, Nasdaq, and Dow Jones Industrial Average soaked up legendary gains, marking four impressive weeks of relentless growth. The tech-heavy Nasdaq advanced 1.7% on the week, not breaking any records but still finding comfort in green territory. Its peers, however, had other plans, with the broad-based S&P 500 surging 1.1% to hit a new peak, while the blue-chip Dow Jones set its ninth record of 2024 with a 0.3% rise.

A significant portion of the record-setting growth can be attributed to tech titan Meta reporting its most substantial quarterly sales increase in two years as well as introducing its first-ever dividend, sending shares soaring 20%. The surge added an incredible $204.5 billion to the Facebook parent’s market value, setting records of its own with the largest one-day market-cap gain in history.

Following in the footsteps of its counterpart in the so-called Magnificent Seven, e-commerce behemoth Amazon reported a 14% annual increase in fourth-quarter sales. The strong results sparked a flurry of investor activity, leading to a 7.9% jump in the tech conglomerate’s shares.

Fed’s a No-Go

In Washington, the Federal Reserve announced on Wednesday that it is not yet easing its grip on monetary policy, keeping its key interest rate steady at the 23-year high of 5.25% – 5.50%. The move takes a strategic aim at bringing inflation down to the central bank’s 2% target.

Although the Fed’s preferred inflation gauge, the PCE (personal consumption expenditure index), most recently came in at a close 2.6%, the Fed remains cautious of premature rate cuts. With slashed hopes, participants polled by the CME Group posted an 85% prediction that the Fed will not make any changes to its monetary policy in its March 20th rate-setting meeting.

In the midst of the interest rate standoff, Friday’s jobs report blew analysts’ expectations out of the water, with a report from the White House calling the data an “upside surprise”. The U.S Bureau of Labor Statistics revealed employment rose by 353,000 new hires in January, while the unemployment rate remained unchanged at 3.7%.

Further, wage growth ticked up by 0.6% in January, beating analysts’ estimates. Coming in 0.2% higher than the reported hourly earnings for November and December, hourly earnings have increased 4.5% over the last 12 months.

The robust data signals a strong economy, despite recent challenges, and further fuels a positive outlook for a “soft landing” – a scenario where the economy manages to cool off to a more sustainable state while avoiding recession.

Looking Ahead

In the coming days, we will hear from several Federal Reserve officials as they offer valuable insights into the central bank’s outlook on the health of the economy.

As the week evolves, it will be as important as ever to stay tuned in to market events and adapt your strategy to break into the first full trading week of February with a bang. A commitment to staying both informed and fluid will stand to push you toward impactful decisions.

TL;DR

Major stock indexes including the S&P 500, the Dow Jones, and the Nasdaq, all experienced remarkable gains, with the S&P 500 and the Dow setting new records. Tech giant Meta broke barriers with the largest one-day market-cap gain in history, after releasing better-than-expected sales earnings. Online store and cloud computing giant Amazon followed suit with a strong 14% revenue increase. Labor data showed 353,000 jobs were added in January, paired with a 0.6% jump in wage growth, topping Wall Street estimates. The Federal Reserve maintained its interest rates on inflation concerns but remained optimistic about future rate trims based on upcoming economic data.

 

Written by Megan Powell