The US stock market showed an increase in the trading session on Friday (2/2), as both the S&P 500 and Dow Jones established new records. This surge was propelled by the positive financial performances of major technology companies, which exceeded analysts’ expectations, and the encouraging employment figures for January. Conversely, crude oil prices experienced a substantial decline, concluding a week marked by significant decreases.
By the market close, the S&P 500 registered a 1.1% gain, settling at 4,958.61 points, surpassing the prior closing record set on Monday. The Dow Jones saw an increase of 134.58 points, equating to a 0.4% rise, concluding at 38,654.42 points. The Nasdaq index exhibited a 1.7% uptick, reaching 15,628.95 points.
Meta, the parent company of the social media giant Facebook, released its Q4 2023 financial report, outperforming earlier analyst predictions. Additionally, the company declared its first quarterly dividend since going public and revealed intentions to allocate $50 billion for share buybacks. Meta’s stock recorded a notable surge of over 20% at the market close.
Similarly, Amazon observed a 7.9% increase in its stock price at the close, attributed to better-than-expected Q4 business results.
The robust rise in technology stocks alleviated investor concerns stemming from the overall January employment report. According to the US Department of Labor, the non-farm sector in the world’s largest economy added 353,000 new jobs in January, significantly surpassing the forecast of 185,000 new jobs as projected by economic analysts surveyed by Dow Jones.
While these figures underscore the resilience of the US economy, the positive news also carries a downside, reinforcing the likelihood that the Federal Reserve (Fed) will maintain higher interest rates for an extended period. Concerns about elevated interest rates were reflected in the surge in yields on US Treasury bonds after the employment report, with the 10-year yield experiencing a notable increase of nearly 0.2 percentage points, reaching 4.02%.
“The market dynamics today indicate that technology stocks may be less influenced by the interest rate scenario and more reliant on fundamental economic factors”, observed Dylan Kremer, Chief Investment Officer at Certuity, in an interview with CNBC. “The market is in a state where technology stocks can still rise even in the face of increasing interest rates. This has taken many by surprise”.
The comprehensive US employment report also includes data on inflation in the form of wage growth. Average hourly wages in the US increased by 4.5% compared to the same period last year, surpassing the anticipated 4.1% growth forecasted by analysts. This robust wage growth reflects persistent inflationary pressures.
In light of these data and statements from Fed Chairman Jerome Powell earlier this week, the probability of a Fed interest rate cut in March is nearly non-existent. Instead, the market anticipates that the first interest rate cut by the Fed will likely occur in May or later this year.
Investors appear to be placing greater emphasis on the positive aspects of employment figures and the steady economic growth, believing that this will fortify the profits of listed companies. For the week, the S&P 500 increased by 1.4%; Nasdaq saw a 1.1% rise, and Dow Jones experienced a 1.4% gain. This marks the fourth consecutive week of gains for these indices following a disappointing start to 2024.
Apple stood as the sole stock deviating from the upward trend of Big Tech in Friday’s trading session. The tech giant witnessed its stock price remaining relatively flat after announcing a 13% decline in sales in China-a pivotal market for the company.
Brent crude oil prices in London declined by $1.37 per barrel, translating to a 1.7% decrease, closing at $77.33 per barrel. WTI crude oil prices in New York dropped by $1.54 per barrel, reflecting a 2% decrease, concluding at $72.28 per barrel.
Throughout the week, both Brent and WTI oil prices saw reductions of approximately 7%.
On Friday, oil prices faced downward pressure due to the prospect of prolonged higher interest rates following the US employment report. Additionally, the sluggish recovery of the Chinese economy and the potential de-escalation of tensions in the Middle East contributed to the downward pressure on oil prices.
On Thursday, oil prices experienced a decline of over 2% following news that Israel and Hamas might reach a ceasefire agreement in the Gaza Strip. If tensions de-escalate in Gaza, it is likely to ease tensions in the Red Sea region, a critical global oil supply route.
By. Pham Thanh Bien
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