Bulls Do the Happy Dance
Today's financial recap and tomorrow's financial outlook.
The Bureau of Labor Statistics said nonfarm payrolls increased by 113,000 in January, which was well below the 180,000 Wall Street consensus.
Additionally, December 2013's 74,000 reading, which also missed expectations by a wide margin, was revised only fractionally higher to 75,000.
However, the recent spate of unusually bad weather likely impacted economists' ability to make reasonable forecasts; this raises questions about how much traders should rely on the data, which even in normal times can be volatile.
Investors may also be thinking that the Fed may choose to slow the rate at which it tapers its quantitative easing activities.
Treasury traders were not as confident as US Treasury yields fell 2.7 bps to 2.675. Elsewhere in fixed income, high-yield and emerging markets bonds were up solidly.
In all, it appears that risk assets put in a near-term bottom between Monday and Wednesday. With negativity having grown perhaps a little too quickly, the stage was set for a contra-rally in the face of bad news for which the market was prepared. Incidentally, the S&P 500 also managed to finish in the green on January 10, the day of the weak December 2013 NFP report.
Looking closer at equities, we saw very bullish action in economically sensitive groups like technology, industrials, and financials, though housing stocks and small caps were a bit sluggish in comparison.
The Nasdaq (INDEXNASDAQ:.IXIC) outperformed, fueled by Apple (NASDAQ:AAPL), which reacted positively to CEO Tim Cook's interview with the Wall Street Journal. Cook said Apple repurchased $14 billion in stock over the past two weeks and that the company was open to large acquisitions.
Travel company Expedia (NASDAQ:EXPE) had a spectacular day, moving up 14.3% to $74.45 after beating fourth-quarter earnings expectations.
LinkedIn (NYSE:LNKD) fell 6.2% to $209.59 after reporting better-than-expected fourth-quarter results but tepid forward guidance. However, the stock finished well off its $201.98 intraday low, and social media peers Facebook (NASDAQ:FB) and Twitter (NYSE:TWTR) rocketed higher.
Monday's Financial Outlook
There is no US economic data on the calendar for Monday.
However, we have some earnings numbers coming. Notable names reporting include Hasbro (NASDAQ:HAS) and CNA Financial (NYSE:CNA) before the open, and Masco (NYSE:MAS) and Owens & Minor (NYSE:OMI) after the close.
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