U.S. stocks kicked off February on an positive note as investors digested an unexpectedly strong January jobs report. But the Nasdaq’s gains are comparatively subdued after Amazon.com Inc.’s tepid outlook weighed on the tech-centric index.
How are benchmarks faring?
The Dow Jones Industrial Average DJIA, +0.28% rose 157 points, or 0.6%, to 25,157, and the S&P 500 index SPX, +0.05% gained 9 points, or 0.4%, to 2,713. The Nasdaq Composite Index COMP, -0.26% climbed 13 points, or 0.2%, to 7,295.
Read: Here is what the stock market’s monster January rally means for February
What’s driving the market?
The stock market’s upbeat mood on the back of one of the best Januarys in decades were further bolstered by robust jobs data.
The U.S. economy created 304,000 new jobs in January, well above MarketWatch’s consensus estimate of 172,000. At the same time, job growth for December was revised down by 90,000, somewhat blunting the impact of the headline number.
The figures show that there was only muted effect on the U.S. economy by the recent government shutdown, though the unemployment rate ticked up to 4% from 3.9%, partially as a result of federal workers not receiving paychecks for much of January.
Average hourly earnings edged up 0.1%, slightly below consensus expectations of 0.2%, a figure that will reinforce the decidedly dovish stance the Federal Reserve adopted earlier this week. The 12-month rate of hourly wage gains dipped to 3.2% from a revised 3.3% in the prior three months, a postrecession high.
Other data also indicated that the economy remains on solid footing.
The ISM manufacturing index’s final reading for January came in at 56.6%, above the initial reading of 54.1% and the 54.3% expected by economists, according to a MarketWatch poll.
The IHS Markit final U.S. manufacturing purchasing managers index reading came in at 54.9 in January, up from 53.8 in December but unchanged from an initial estimate.
The University of Michigan revised up its reading of consumer sentiment for January, from an initial print of 90.7 to 91.2. That compares to a 98.3 reading for December and is the worst final reading since the election of Donald Trump.
Construction spending rose in November, up 0.8% from October to a seasonally adjusted annual rate of $1.2 trillion, the Commerce Department said Friday morning in a release that was delayed due to the government shutdown.
It also announced that wholesale inventories rise 0.3% in November from the prior month.
What are strategists saying?
The market won’t react strongly to this jobs report, despite the surprisingly high number of new jobs, James Athey, senior investment manager at Aberdeen Standard Investments, told MarketWatch.
“The one piece of data that has been consistent over the past eight years is strong job growth,” he said. “And those numbers have been insufficient to affect the Fed’s reaction function,” he said, adding that the dovish turn “we’ve seen from the Fed is so dramatic that it one good report is not going to get them to reverse course.”
“Under normal circumstances we would have had a negative reaction to this number, because it would cause the market to expect more rate hikes,” Tom Essaye, president of the Sevens Report, said.
“But this won’t change the Fed’s calculus. Also, jobs are a really bad lagging indicator of future economic activity. If you want to trade and time recessions using jobs numbers, you’ll lose a lot of money,” he said, adding that the Fed is more focused on other indicators that show inflation and inflation expectations falling in recent months.
Which stocks are in focus
Shares of Amazon.com AMZN, -5.03% were down 4.1% after it reported record holiday-quarter earnings and revenue late Thursday, but offered an outlook for the current quarter that was below expectations.
Shares of Merck & Co. MRK, +2.89% rose 3.8% after the pharmaceutical giant reported fourth-quarter earnings and revenue that surpassed consensus expectations.
Honeywell International Inc. HON, +1.05% gained 2.1% after the firm reported adjusted profit and revenue that rose above expectations.
Shares of Cigna Corp. CI, -2.14% slid 3% after the health care company said profit fell 46% in the fourth quarter.
Shares of Symantec Corp. SYMC, +8.80% soared 11% after the cybersecurity company reported better-than-expected quarterly earnings and revenue.
How are other markets trading?
Asian markets closed mostly stronger, with Japan’s Nikkei 225 NIK, +0.07% rising 0.1%, Hong Kong’s Hang Seng Index HSI, -0.04% slipping less than 0.1%, and the Shanghai Composite Index SHCOMP, +1.30% gaining 1.3%.
Stocks in Europe were mixed, with the Stoxx Europe 600 SXXP, +0.29% virtually unchanged and the FTSE 100 UKX, +0.74% rising 0.6%.
Crude-oil futures CLH9, +2.86% climbed, while the U.S. dollar DXY, +0.00% lost ground against rival currencies, and the price of gold GCH9, -0.23% reversed direction to trade lower.
—Mark DeCambre contributed to this report
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