Nasdaq Index, Dow Jones, S&P 500 News: Tech, Energy Sector Gains Offsetting Yields Surge

Key Points

• S&P 500 and Nasdaq up, Dow Jones down post-jobs report.
• 10-year Treasury yield hits 4% on unexpected job gains.
• Chevron, Exxon beat estimates; profits dip from last year.

U.S. Stock Market Overview

In the aftermath of Friday’s trading session, the U.S. stock market exhibited a mixed performance. The S&P 500 saw gains, largely driven by its technology sector, while the tech-heavy Nasdaq-100 Index outperformed with significant gains. Conversely, the Dow Jones Industrial Average faced declines, influenced by the strong U.S. labor market data.

At 15:26 GMT, the Dow is trading 38432.87, down 86.97 or -0.23%. The S&P 500 Index is at 4925.91, up 19.72 or +0.40% and the Nasdaq-100 Index is trading 15491.59, up 129.95 or +0.85%.

Treasury Yields and Jobs Data

The benchmark 10-year Treasury yield leaped to 4%, a reaction to the U.S. economy adding a robust 353,000 jobs in January, far exceeding the Dow Jones estimate of 185,000. This surge in Treasury yields reflects investor recalibration in light of the strong jobs report, suggesting ongoing economic strength. The unemployment rate remained steady at 3.7%, aligning closely with forecasts.

Fed’s Interest Rate Stance

The robust jobs data casts doubt on the likelihood of imminent interest rate cuts by the Federal Reserve. Despite market anticipation, Fed Chair Jerome Powell has indicated a cautious approach to rate reductions, with a potential delay until later in the year. This perspective is reinforced by the wage growth data, which showed a 0.6% rise, suggesting persistent inflationary pressures.

Tech Sector Performance

In the technology sector, notable earnings reports had a positive impact. Shares of Meta surged by 17% following better-than-expected results and announcements of dividends and a share buyback program. Amazon shares also saw a 7% rise after exceeding fourth-quarter expectations. However, Apple experienced a downturn with a 2% drop, attributed to declining sales in China.

Energy Sector Insights

The energy sector presented a mixed picture. Chevron and Exxon both surpassed earnings expectations, but faced year-over-year profit declines due to various challenges, including impairment charges and lower oil prices. Despite these setbacks, both companies demonstrated strong shareholder returns through dividends and buybacks.

Market Outlook

The strong labor market data, combined with sustained wage growth, suggests that the U.S. economy remains resilient, potentially delaying the Fed’s timeline for rate cuts. This scenario could be bearish for stocks in the short term as investors reassess the implications for interest rates and inflation. However, the robustness of the tech and energy sectors provides a counterbalance, indicating potential areas of growth and resilience in the market.

Technical Analysis

E-mini S&P 500 Index futures are higher on Friday. The buying was strong overnight as the tech sector rose in conjunction better-than-expected earnings from a few tech-giants, but gains have been capped by robust U.S. jobs data.

The key level to watch into the close is 4928.50. Holding above this level will indicate the presence of buyers.

A close below 4928.50 will form a potentially bearish closing price reversal top. If confirmed next week, it could trigger the start of a 2 to 3 day correction with the 50 day moving averge at 4770.70 the first major target.