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05/02/24 Briefing

Wall Street closed sharply higher on Friday following strong earnings results of technology behemoths. Moreover, solid job data and other economic data also helped reducing concerns for an immediate recession. All three major stock indexes ended in positive territory. For the week, these indexes also finished in green.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) was up 0.4% or 134.78 points to close at 38,654.62. This marked the ninth closing high for the blue-chip index year to date. Notably, 12 components of the 30-stock index ended in positive territory, 17 ended in negative zone, while one remained unchanged.

The tech-heavy Nasdaq Composite finished at 15,628.95, advancing 1.7% or 267.31 points due to impressive performance by technology giants. The tech-laden index registered a fresh 52-week high. The S&P 500 gained 1.1% to finish at 4,958.60. This marked the seventh closing high for Wall Street’s benchmark year to date.

Six out of 11 broad sectors of the broad-market index ended in positive territory while five in negative zone. The Communication Services Select Sector SPDR (XLC), the Consumer Discretionary Select Sector SPDR (XLY) and the Technology Select Sector SPDR (XLK) climbed 4%, 1.85 and 1%, respectively. On the Other hand, the Utilities Select Sector SPDR (XLU) tumbled 1.8%.   The fear-gauge CBOE Volatility Index (VIX) was down 0.2% to 13.85. A total of 11.2 billion shares were traded on Friday, lower than the last 20-session average of 11.6 billion. The S&P 500 posted 68 new highs and four new lows, while the Nasdaq recorded 75 new highs and 144 new lows.

Strong Earnings Data

Meta Platforms Inc. META reported fourth-quarter 2023 earnings of $5.33 per share, beating the Zacks Consensus Estimate by 10.4%. Revenues of $40.11 billion beat the Zacks Consensus Estimate by 2.9%. The social-media behemoth announced first-ever dividend payment of $0.5 per share and authorized a $50 billion share buyback program. Inc. AMZN reported adjusted earnings of $1.01 per share, topping the Zacks Consensus Estimate by 24.7%. Net sales of $169.96 billion surpassed the Zacks Consensus Estimate of $166.26 billion.

Consequently, shares of Meta and Amazon soared 20.3% and 7.9%, respectively. Both stocks currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Solid Jobs Data

The Department of Labor reported that the U.S. economy added 353,000 nonfarm jobs in January, well above the consensus estimate of 185,000. Moreover, the data for December was revised upward to 333,000 from 216,000 reported earlier. Similarly, the data for November was also revised upward by 9,000 to 182,000.Major sectors that added jobs included professional and business services (74,000), health care (70,000), retail trade (45,000), government (36,000), social assistance (30,000) and manufacturing (23,000).Unemployment rate in January was 3.7%, same with December. The consensus estimate was 3.8%. However, the real unemployment rate (including discouraged workers and those holding part-time jobs for economic reasons) edged higher to 7.2%.The labor force participation rate was unchanged at 62.5%. Average workweek dropped to 34.1 in January from 34.3 in December. Hourly wage rate increased 0.6% in January compared with 0.4% in December. The consensus estimate was 0.3%. Year over year, hourly wage rate increased 4.5%, beating the consensus estimate of 4.1%.

Other Economic Data

The University of Michigan reported that the index for U.S. consumer sentiment jumped 13% in January, marking its highest level since July 2021. The final index for January was 79, in line with the consensus estimate. The final index for December was also 69.7 and the preliminary reading for January was 78.8.In January, the Current Index rose to 81.9, up from 73.3 in December. The Expectations Index rose to 77.1, up from 67.4 in December. According to the report, over the last two months, sentiment has climbed a cumulative 29%, the largest two-month increase since 1991.The U.S. Census Bureau reported that new orders for manufactured goods in December, up four of the last five months, increased $1.2 billion or 0.2% to $594.3 billion. The data was in line with the consensus estimate. However, in November, the metric climbed 2.6%.New orders for manufactured durable goods in December, down two of the last three months, decreased less than $0.1 billion or virtually unchanged to $295.4 billion. New orders for manufactured nondurable goods increased $1.2 billion or 0.4% to $298.9 billion in December.

Weekly Roundup

Last week was a good one for U.S. stock markets. The three major stock indexes – the Dow, the S&P 500 and the Nasdaq Composite – were up 1.4%, 1.4% and 1.1%, respectively. All three indexes recorded fourth consecutive weekly gains.

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