Wall Street Breakfast: What Moved Markets

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Wall Street Breakfast

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Stocks fell Friday as a much stronger than expected jobs report worried some investors that the Federal Reserve would keep hiking interest rates. Data from the Labor Department showed the U.S. economy adding 517,000 in January, crushing consensus estimates, with the unemployment rate dropping to a 54-year low 3.4%. U.S. Treasurys sold off on the blowout report, with the two-year yield soaring 21 basis points to 4.29% and the benchmark 10-year note rising 14 basis points to 3.53%. Still, the S&P 500 booked its fourth weekly gain in five weeks, up 1.6%, as investors bet inflation is headed lower. Meanwhile, the Nasdaq surged 3.3% for a fifth straight weekly advance thanks to strong earnings from some major tech companies, The Dow Jones average was the week's outlier, falling 0.3%. Read Seeking Alpha's Catalyst Watch for a preview of next week's events.

Global sales crown

Toyota (NYSE:TM) not only defended its title as the world's top-selling automaker for a third year in a row, but did so by a wide margin. Including subsidiaries Hino Motors and Daihatsu, group sales reached 10.5M vehicles in 2022, compared to the 8.3M of its second-ranked rival Volkswagen (OTCPK:VWAGY). The news comes after Toyota shocked the industry with its first CEO transition in 14 years that could indicate a stronger focus on next-generation vehicles. SA contributor Ramy Taraboulsi flags some interesting winners in the EV race, even if their strategies and business models are flawed. See how he stacks up the visions of Toyota versus Tesla (NASDAQ:TSLA), as well as their core competencies and financial projections. (370 comments)

Ruled out?

Will the U.S. send F-16 jets to Ukraine to help in its war against Russia? "No," President Biden told reporters, ruling out the fourth-generation fighters. Some believe that the decision might eventually be reversed, which could be a boon to defense players like Lockheed Martin (LMT), especially given pressure from Poland and other NATO allies. In fact, there have already been several times that the U.S. administration was resistant to a particular weapons system, only to approve it after rounds of negotiations (M1 Abrams tanks and the Patriot missile defense system). The latest developments follow reports this week that Russia might be mobilizing another 200K troops for a fresh offensive. (43 comments)

Path to a soft landing

As expected, the Federal Reserve hiked its policy rate by 25 basis points to 4.50%-4.75% on Wednesday, slowing the rapid tightening campaign that had dented stocks and other assets in 2022. "We've [now] raised rates four and a half percentage points, and we're talking about a couple of more rate hikes to get to that level we think is appropriately restrictive," Fed Chair Jay Powell declared. "Why do we think that's probably necessary? We think because inflation is still running very hot." While the central bank reiterated that it would be data-dependent, investors are already seeing the light at the end of the tunnel, with the Nasdaq Composite Index finishing the session up 2% (Bitcoin (BTC-USD) and cryptos also got a boost). "The rate hike cycle is not done just yet, and with the Fed still pulling liquidity out of the markets, investors would be wise to remain vigilant," cautioned Seeking Alpha contributor Ahan Vashi. (233 comments)

Meta gets betta

Back from the edge of the metaverse, social media giant Meta Platforms (META) soared more than 20% in after-hours trading on Wednesday as investors renewed their confidence in CEO Mark Zuckerberg. Helping the situation was a big revenue beat, as well as a massive $40B share buyback program. Meta also released a forecast for FQ1 revenue that could reach as high as $28.5B, which would top sales seen during Q1 of 2021 (and was right before Apple's (AAPL) privacy measures heavily dented its ad revenues). On a conference call with analysts, Zuckerberg called 2023 the "year of efficiency," while a federal judge ruled that Meta could M&A its way into the virtual reality space in a blow to the FTC. (165 comments)

Tech wreck

Risk-on sentiment later deflated after the bell on Thursday following a slew of disappointing results from Big Tech. iPhone weakness and FX headwinds led Apple (AAPL) to report a FQ1 miss, prompting shares to fall 3.7% AH. Things weren't any better at Amazon (AMZN), which posted softer cloud growth and slipped 5.1%, as well as Alphabet (GOOG, GOOGL), which stumbled 4.6% after missing Wall Street estimates (see what Google said about artificial intelligence). Despite the losses, all three stocks were net gainers on Thursday - following a bumper session during regular trading - though concerns remain. Keep an eye out for how a macro slowdown and a hit to demand are making the digital economy more challenging. (98 comments)

U.S. Indices
Dow -0.2% to 33,926. S&P 500 +1.6% to 4,136. Nasdaq +3.3% to 12,007. Russell 2000 +3.9% to 1,986. CBOE Volatility Index -1% to 18.33.

S&P 500 Sectors
Consumer Staples +0.6%. Utilities -1.5%. Financials +0.9%. Telecom +5.3%. Healthcare -0.1%. Industrials +1.7%. Information Technology +3.7%. Materials flat. Energy -5.9%. Consumer Discretionary +2.2%.

World Indices
London +1.8% to 7,902. France +1.9% to 7,234. Germany +2.2% to 15,476. Japan +0.5% to 27,512. China flat at 3,263. Hong Kong -4.5% to 21,660. India +2.6% to 60,842.

Commodities and Bonds
Crude Oil WTI -7.8% to $73.23/bbl. Gold -3% to $1,877.7/oz. Natural Gas -23.3% to 2.385. Ten-Year Bond Yield -0.2 bps to 3.519.

Forex and Cryptos
EUR/USD -0.66%. USD/JPY +1.03%. GBP/USD -2.77%. Bitcoin +1.3%. Litecoin +10.3%. Ethereum +5.2%. XRP +0.2%.

Top S&P 500 Gainers
Align Technology (ALGN) +27%. Meta Platforms (META) +23%. W.W. Grainger (GWW) +18%. Pentair plc (PNR) +15%. A. O. Smith (AOS) +14%.

Top S&P 500 Losers
ConocoPhillips (COP) -13%. Hess (HES) -12%. Electronic Arts (EA) -12%. Marathon Petroleum (MPC) -11%. Match Group (MTCH) -10%.

Where will the markets be headed next week? Current trends and ideas? Add your thoughts to the comments section.

This article was written by

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Wall Street Breakfast, Seeking Alpha's flagship daily business news summary, is a one-page summary that gives you a rapid overview of the day's key financial news. It's designed for easy readability on the site or by email (including on mobile devices), and is published before 7:30 AM ET every market day. Wall Street Breakfast readership of over 3.4 million includes many from the investment-banking and fund-management industries. Sign up here to receive the Wall Street Breakfast in your inbox every business day: http://seekingalpha.com/account/email_preferences Podcast RSS feed: https://www.spreaker.com/show/5725002/episodes/feed

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