US Stock Market Surges as Robust Economy Fuels Investor Confidence

The US stock market experienced significant gains this week, propelled by a strong rally in big tech and an encouraging jobs report that revitalized corporate profit outlooks. The S&P 500 neared the 5,000 mark while the Nasdaq 100 climbed about 2%, buoyed by optimistic forecasts from Meta Platforms Inc, (META) . and Amazon.com Inc. (AMZN), Economic enthusiasm overshadowed expectations that the Federal Reserve might hold off on rate cuts. Following the jobs report, two-year Treasury yields leaped 16 basis points to 4.36%, and the dollar approached pre-Federal Reserve pivot levels.

The economy demonstrated remarkable strength with a 353,000 increase in nonfarm payrolls last month, coupled with a steady unemployment rate at 3.7%. Hourly wages saw their most significant rise since March 2022. Concurrently, US consumer sentiment showed a notable uptick.

This strong economic data suggests that the Federal Reserve might delay rate cuts, potentially until the second quarter or later. Post-jobs report, Treasury yields surged, and swap contracts associated with the March Fed meeting reduced the likelihood of a quarter-point rate cut to about 15%. Fed Chair Powell, in a recent statement, indicated that a rate cut in the March meeting is unlikely.

In the corporate world, Meta Platforms Inc. shone with impressive quarterly earnings, potentially adding an unprecedented $200 billion to its market capitalization. Cost-cutting measures, including job cuts, and robust holiday season performance were key drivers for Meta and Amazon, distinguishing them in the big-tech earnings season. Meta also announced a $50 billion stock buyback and its inaugural quarterly dividend.

Conversely, Apple Inc. reported a deepening slump in China, though iPhone sales exceeded expectations. Exxon Mobil Corp. (XOM), and Chevron Corp. (CVX), surpassed earnings expectations, with higher-than-anticipated output from shale fields mitigating the impact of falling crude prices.

Key Market Movements:

• S&P 500 up 1.3%, Nasdaq 100 up 1.9%, Dow Jones up 0.6%, MSCI World index up 0.7%.
• The Bloomberg Dollar Spot Index rose 0.6%, with significant shifts in the euro, British pound, and Japanese yen.
• Bitcoin and Ether saw slight decreases.
• Yield on 10-year Treasuries climbed 15 basis points to 4.03%.
• West Texas Intermediate crude dropped 2.3%, and spot gold declined by 0.8%.