THE WEEK ON WALL STREET
Stocks managed to gain ground last week as investors turned their focus
to corporate earnings. The Dow Jones Industrial Average rose 1.05%, while the
Standard & Poor’s 500 gained 1.55%. The Nasdaq Composite index picked up 2.38%
for the week. The MSCI EAFE index, which tracks developed overseas stock
markets, tacked on 2.73%.
EARNINGS IN FOCUS
At the start of the week, stocks extended the previous week’s rally with some high-
growth companies leading the move higher. Strong company profits fueled the
market the middle of the week, until an earnings disappointment from a mega-cap
company took investors by surprise. The earnings miss deflated sentiment as it
heightened worries of what it may portend for other technology companies yet to
report. These anxieties led to a sell-off that reverberated across the market.
Subsequent earnings beats from several technology and social media names, and an
above-consensus rise in new payrolls on Friday, helped the market close with week
with a solid gain.
OMICRON AND UNEMPLOYMENT
A string of employment reports pointed to a generally healthy labor market, despite
the Omicron surge late last year. The Job Openings and Turnover Survey (JOLTS)
showed a hiring slowdown, with near-record high job openings and worker
resignations. The ADP (Automated Data Processing) employment report saw
private payrolls shrink by 301,000. That was the first monthly decline since
December 2020. More encouragingly, initial jobless claims declined, while
continuing jobless claims reached their lowest level since 1973. A strong January
employment report showed 467,000 jobs added during the month, with upward
revisions to previously released November and December.
THE WEEK AHEAD: KEY ECONOMIC DATA
Thursday: Consumer Price Index (CPI). Jobless Claims.
Friday: Consumer Sentiment.
THE WEEK AHEAD: NOTABLE COMPANIES REPORTING EARNINGS
Monday: Amgen, Inc. (AMGN).
Tuesday: Pfizer, Inc.(PFE), Chipotle Mexican Grill, Inc. (CMG), Sysco Corporation
(SYY).
Wednesday: CVS Health Corporation (CVS), The Walt Disney Company (DIS),
Twilio, Inc. (TWLO), Yum Brands, Inc. (YUM), O’Reilly Automotive, Inc. (ORLY).
Thursday: Twitter, Inc. (TWTR), The CocaCola Company (KO), Illumina, Inc.
(ILMN), Duke Energy Corporation (DUK), PepsiCo, Inc. (PEP), Kellogg Company
(K), Expedia Group, Inc. (EXPE).
Friday: Dominion Energy, Inc. (D).
FINAL THOUGHTS
The market has seen a lot of volatility since the beginning of the year. A lot of bad
news has been priced in and the market became pretty oversold. Maybe more bad
news than we will actually see in the near term. We could see a bounce in February
as the market catches its breath, provided we continue to see good earnings reports
from corporate America. So far, about half of the S&P 500 has reported earnings
with 88% beating earnings expectations. That doesn’t sound like an economy that
is ready to die. We’ll continue to monitor the situation and keep you informed.
Have a good week!
