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Payrolls, mega-cap tech earnings, Nvidia - what's moving markets

Published 02/02/2024, 10:10
Updated 02/02/2024, 10:10
© Reuters

Investing.com -- Investors will keep a wary eye on the January jobs report later in the session for clues over the Fed's future interest rate path, while the quarterly corporate earnings season continues.The mega-cap tech sector is likely to drive sentiment, while the crude market is set to end the week with hefty losses. 

1. January payrolls in spotlight 

The widely-watched monthly jobs report is due later in the session, and will offer a guide about the health of the U.S. labor market, potentially a key factor in influencing when the Federal Reserve will start cutting interest rates.

The U.S. economy is expected to have added 187,000 new jobs in January, slowing from 216,000 the prior month, with the jobless rate ticking up to 3.8% from 3.7%.

This would come after a surprise jump in jobless claims and a weak private payrolls report.

A downside miss in payrolls could indicate that the 525 basis points of rate increases delivered by the Fed since 2022 are finally starting to bite, potentially bringing a March rate cut back into play. 

Traders have been pushing back bets on the beginning of U.S. rate cuts this year, but fresh signs of softness in the labor market would justify the current pricing of more than 140 basis points of cuts by year's end.

2. Futures mixed ahead of payrolls release 

U.S. stock futures traded largely higher Friday ahead of key employment data, with the tech-heavy Nasdaq index set to outperform after strong results from Meta Platforms (NASDAQ:META) and Amazon (NASDAQ:AMZN) after the previous close.

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By 05:05 ET (10:05 GMT), the Dow futures contract was mostly unchanged, S&P 500 futures climbed 25 points or 0.5%, and Nasdaq 100 futures rose 165 points, or 1%.

The three main indices all closed around 1% higher on Thursday, rebounding after the post-Federal Reserve losses, helped by better-than-expected earnings largely across the board. 

Investors will have a key economic release to digest Friday, the monthly jobs report [see above], while quarterly earnings continue to emerge, from the likes of Chevron (NYSE:CVX), Exxon Mobil (NYSE:XOM), Bristol-Myers Squibb (NYSE:BMY) and AbbVie (NYSE:ABBV). 

3. Meta and Amazon shine, while Apple disappointed

Three of the mega-cap growth and technology stocks that have powered markets higher for much of the last year reported after Thursday’s market close, with differing impacts.

The shares of Meta Platforms and Amazon soared in after hours trade, adding a combined $280 billion in stock market value after the tech giants impressed investors with their quarterly results, while Apple's value shrank by $70 billion after its results.

Meta delivered a 25% jump in revenue for the December quarter, fueled by robust advertising and device sales, and the Facebook owner declared its first-ever dividend.

Amazon impressed as cloud growth met expectations while growth in online spending surged during the critical holiday shopping season. 

By contrast, Apple (NASDAQ:AAPL) forecast a drop in iPhone sales and targeted overall revenue $6 billion below expectations, indicating that its signature product is losing ground in the key Chinese market.

4. Nvidia value soared in January

The optimism surrounding the impact of artificial intelligence on corporate bottom lines was illustrated by the demand for Nvidia (NASDAQ:NVDA) stock this month.

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The world's most valuable chipmaker saw its market value expand by a record $296.52 billion in January to around $1.52 trillion, surpassing the $248.23 billion in gains seen in May 2023.

Nvidia currently has a dominant position in the market for advanced AI chips, and plans to begin mass production later this year of an AI chip designed for its Chinese customers in order to comply with tightened U.S. export rules.

5. Oil heading for hefty weekly loss

Oil prices edged higher Friday, but were still on course for hefty weekly losses following unsubstantiated reports that a ceasefire between Israel and Hamas was being discussed.

By 05:05 ET, the U.S. crude futures traded 0.7% higher at $74.33 a barrel, while the Brent contract climbed 0.7% to $79.23 per barrel. 

The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, kept its oil output policy unchanged on Thursday, likely ensuring supply remained tight in the first quarter of the year.

The group will next meet in March to decide whether or not to extend the voluntary oil production cuts in place for the first quarter.

However, both contracts were on course for weekly losses of around 5%, as an end to the war between Israel and Iran-backed Hamas would lessen the tensions in the Middle East, easing concerns about supply disruptions through this key oil-rich region.

 

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