U.S. Markets Volatile Ahead of Fed Chairman Powell’s Speech
By U.S. markets are expected to remain volatile this week after a stronger-than-expected jobs report released Friday upended traders’ optimism, who had earlier hoped that the Federal Reserve would likely reduce the pace of interest rate hikes in the coming months.[0] Market participants will also be closely watching Federal Reserve Chairman Jerome Powell's speech before the Economic Club of Washington on Tuesday, February 7.
The report showed that the U.S. economy added 517,000 jobs in January, easily topping a Dow Jones consensus forecast of 187,000.[1] The unemployment rate also decreased to 3.4%, the lowest it has been since 1969, from 3.5% in December.[2] This complicates the Fed's efforts to bring down inflation by aggressively hiking interest rates.[2]
This week, Disney (DIS), BP (BP), PepsiCo (PEP), Uber (UBER), Chipotle Mexican Grill (CMG), and AbbVie (ABBV) are among the notable companies that will report their earnings.[3]
The S&P 500 had an increase of approximately 2.5% for the week, the Dow Jones Industrial Average went up 1.8%, and the Nasdaq Composite, which is heavily tech-oriented, topped them all with a rise of more than 4%.[4]
The stock of Dell Technologies Inc (NYSE: DELL) dropped by 4.3% following a Bloomberg report that it would be shedding 6,650 jobs, which is about 5% of its global labor force, due to the weak demand for PCs affecting its results.[5] Meanwhile, shares of Tyson Foods Inc (NYSE:TSN) fell 4.9% after chicken and meat producer fell short of quarterly expectations on slowing demand and a decline in chicken prices.[5]
Following Bloomberg's news that Danaher (DHR) is looking to acquire life sciences company, Catalent (CTLT) shares rose by more than 20%.[3] The price of DHR stock decreased[3]
The disinflation process may have begun, but a strong labor market may prove troubling for bets for inflation to continue to drop quickly, Edward Moya, senior market strategist at currency data provider OANDA said.[2] Investors expecting that the Fed will cut rates at the end of the year might be in for a rude awakening, he said.[2]
Overall, investors should be prepared to face a volatile week as they await more earnings reports and the upcoming speech from Federal Reserve Chairman Jerome Powell.
0. “Stock Market News Today: Indices Get the Monday Blues” msnNOW, 6 Feb. 2023, https://www.msn.com/en-us/money/markets/stock-market-news-today-indices-get-the-monday-blues/ar-AA179VsW
1. “Stocks fall on Friday, but S&P 500 notches winning week as strong 2023 continues” CNBC, 3 Feb. 2023, https://www.cnbc.com/2023/02/02/stock-futures-fall-after-earnings-reports-from-apple-alphabet-disappoint-investors.html
2. “Stock Market Today: Stocks Drop After Bleak Big Tech Earnings, Jobs Shocker” Kiplinger's Personal Finance, 3 Feb. 2023, https://www.kiplinger.com/investing/stocks/stock-market-today-020323-stocks-drop-after-bleak-big-tech-earnings-jobs-shocker
3. “Stock Market On The Defensive Ahead Of Powell's Comments; C3.ai Up 150% | Investor's Business Daily” Investor's Business Daily, 6 Feb. 2023, https://www.investors.com/market-trend/stock-market-today/stock-market-catches-it-breath-after-recent-gains-onsemi-shows-strength/
4. “Fed meeting, jobs data, Apple earnings: What to know this week” Yahoo News, 29 Jan. 2023, https://news.yahoo.com/stock-market-week-ahead-big-tech-earnings-federal-reserve-fomc-interest-rates-125335273.html
5. “U.S. stocks are falling as investors await Fed's Powell By Investing.com” Investing.com, 6 Feb. 2023, https://www.investing.com/news/stock-market-news/us-stocks-are-falling-as-investors-await-feds-powell-2996215
