The Dow Jones Industrial Average (Dow) advanced 1,206.95 points, or 2.47%, last Friday, closing at 50,115.67. This was the first time the Dow exceeded the 50,000 level. The 30-stock Dow rose 2.5% last week, benefiting from a rotation into some economically cyclical stocks even as the overall market was weighed down by tech selling.
Even with Friday’s pop of 1.97% to 6,932.30, the S&P 500 posted a 0.1% decline for the week, while the Nasdaq rose 2.18% last Friday, fell 1.8% on the week.
Nvidia (NVDA) and Broadcom (AVGO) were two of the key winners Friday, with the former increasing by nearly 8% and the latter growing 7% following big declines earlier in the week.
The jobs report for January was delayed due to the government shut down. The ADP employment report, Job Openings and Labor, Turnover Survey (JOLTS) data, and Challenger report on job cuts pointed to a trend of softening in the labor market.
Manufacturing and services Purchasing Managers’ Indexes (PMIs) from the Institute for Supply Management (ISM) demonstrated more balanced sentiment between the two sectors, with both in expansionary territory.
Consumer sentiment from the University of Michigan improved to a six-month high, but remains low relative to historical norms.
Looking ahead to this week, investors will be focused on consumer price index CPI inflation for January as well as the rescheduled release of the job report for January.
Other key updates will include retail sales for December as well as small business optimism and existing home sales for January.
Earnings this week:
Healthcare and Industrials are poised to dominate this week’s earnings calendar, with 74 companies from the S&P 500 scheduled to report. Key names include Cisco Systems (CSCO), Gilead Sciences (GILD), CVS Health (CVS), Coinbase Global (COIN) and Applied Materials (AMAT). Other notable reports are expected from Ford Motor (F), The Coca-Cola (KO), McDonald’s (MCD) and Airbnb (ABNB)
Hit the Looking Ahead link below and you will find a report with supporting information, charts, tables, & graphs, written by Wells Fargo Investment Institute. Below are excerpts from that research.
Week review: February 2-6
Economic data
- The ADP Employment Report for January indicated a continuation of the low-hire, low-fire environment, with private employers, adding only 22,000 jobs. The print came in below consensus expectations and represented a step down from December’s final print of 37,000.
- Education and health services’ strong month-over-month gain kept the overall print positive.
- The most significant decline was seen in professional and business services, and manufacturing saw another month of job losses that added to a nearly two-year streak of monthly declines.
- Signs of labor market weakness extended into JOLTS data for December, which showed job openings declined by 386,000 month-over-month to 6.5 million, their lowest level since 2020. Further, the November print was revised downward by 218,000.
- Similarly, the Challenger report showed announced job cuts increasing significantly to 108,000, led by cuts in transportation and technology. The top cited reasons included contract losses, as well as market and economic conditions. Depressed announced hiring plans, also pointed to a cautious outlook among employers.
- The ISM manufacturing and services PMIs for January came in at 52.6 and 53.8, respectively. The reports reflected more balanced activity with manufacturing growth adding support to a still resilient services sector.
- The manufacturing print represented a notable month-over-month improvement as it moved from 10 consecutive months of contraction into expansion, driven by broad based improvements across its sub index.
- The services print remained unchanged month-over-month. Notably, the employment component expanded for the second consecutive month. Meanwhile, mentions of tariff impact and uncertainty increased.
- February’s index of consumer sentiment increased slightly month-over-month to 57.3, driven by a modest improvement in perceptions of current economic conditions, though the overall level remains low relative to historical norms.
- The report demonstrated a notable divide in sentiment based on the size of the respondents stock portfolio, with more stock market exposure, correlated with improved sentiment and vice versa.
Looking Ahead to this week: February 9-13
U.S.
- Early this week, the highlight will be December retail sales on Tuesday, followed by the delayed January jobs report on Wednesday. Attention then will shift to the January CPI out Friday.
- Also on tap: January small business optimism and existing home sales; December Import and Export Price Indexes; November business inventories; and the fourth-quarter Employment Cost Index.
- Markets will also be watching Congress for negotiations on the Department of Homeland Security as its funding is set to lapse on Friday.
- In the auction space, the US Treasury Department issues $125 billion in 3-, 10-, and 30-year securities.
Asia
- In China, the focus will be on January’s CPI, Producer Price Index (PPI), money supply, and home price prices.
- Results from Japan’s lower house election will be assessed by investors, while data out from the country includes labor cash earnings, the PPI, the money supply, and preliminary machine tool orders.
- Elsewhere in the region, South Korea’s Export, Price Index and employment rate hit the tape, along with Australia’s household, spending, consumer confidence, and business confidence.
Europe
- In Europe, the highlight will be a second look at the euro zones, fourth-quarter, gross domestic product, GDP along with fourth-quarter employment and the December trade balance.
- From the U.K., look for both monthly and quarterly GDP figures in addition to January‘s house price balance, and December’s industrial production, Index of Services, and trade balance.
