What We Learned Last Week
“Don’t you feel it growing day by day? People getting ready for the new, some are happy, some are sad, Whoa, we gotta let the music play.” – Listen to the Music, The Doobie Brothers
A volatile week of trading found some support on Friday as the Dow Jones Industrial Average closed above 50,000 for the first time ever.
The 30-stock Dow gained more than 1,200 points, or 2.47%, on Friday as stocks completed the week rotating out technology stocks and into more cyclical sensitive sectors of the market (consumer staples, industrials, energy, and materials).
Walmart, a Dow component, finished the week with its market capitalization (one determination of value for a company) above $1 trillion.
Looking deeper at the drop in tech stocks, we look no further than artificial intelligence. This past Sunday’s Super Bowl took place in San Francisco, which is also home to artificial intelligence company Anthropic and perhaps an event with more of economic impact than the annual tradition.
Claude Cowork is a new AI tool, designed to be like an AI colleague, with the ability to read files, organize folders and draft documents – plugins allow it to be tailored for specific industries. The concern on Wall Street raised fears that the current software as a service business model is now at risk of disruption along with hefty spending from big tech companies.
As long-term investors we take note of these events in proximity to what we already know, it may be too early to draw any conclusions – other than volatility is to be expected given we are still in the early stages of this AI revolution.
Moving to the economy, unemployment data was delayed due to the government shutdown. We did get jobs data from ADP and weekly jobless claims. Both reports paint a picture of a stalled labor market as ADP private payroll number comes in well below expectations and initial claims jumped 22,000 to 231,000.
The week ahead is packed with corporate earnings reports from many of the companies in sectors mentioned earlier. There’s the potential for unemployment data for the month of January, with inflation data capping the week – the volatility theme is expected to continue.
What’s Ahead This Week
Economic Events
- January U.S. employment report, delayed from Friday, is scheduled to report on Wednesday.
- Initial jobless claims have picked up, and investors will be watching for a trend with this Thursday’s report
- Inflation is being watched closely as tariff policy may contribute to hotter prices, making Fed policy a challenge. CPI reports Friday.
Earnings
The earnings calendar is still full each day.
- Tech companies to watch; newcomer CoreWeave has gained attention for its cloud-computing infrastructure for ai developers. Cisco, AppLovin, Applied Materials, Arista Networks; all tied to the buildout of ai report earnings this week.
- Consumer companies on the radar: Lowes, Coca-Cola, Marriott, Ford, McDonald’s, Shopify, and Unilever, AnheuserBusch, and British American Tobacco
- Companies in the materials sector have been leading the way this year: Southern Copper is one of the world’s largest metal and mineral mining companies.
- In the industrial sector, Vertiv, a cooling play for hot ai datacenters reports on Wednesday. Howmet Aerospace, a growing defense contractor and vendor for the commercial aircraft industry, provides engineered solutions, reports Thursday
My goal is for you to feel educated and informed about variables we do and don’t have control over and find ourselves working within. I hope to do it in an informative and relatable way. As always, I value your relationship and planning objectives – my door is always open for conversation.
