Strong Payrolls And Earnings Drive Stocks Higher

Building on yesterday’s US index gains of 1.0%-1.3%, US index futures are up 0.1% to 1.0% with NASDAQ Futures leading the way higher amid a series of positive business developments. Over in Europe today, the Dax is up 0.7% and the FTSE is up 0.4%. The US 10-year treasury note yield has climbed back up toward 4.00%, sparking a US Dollar rally that has knocked Gold down 0.5%, Silver down 1.2%, the Euro down 0.4% and the Loonie down 0.2%.

Starting with earnings, Meta Platforms* (META) is up 17.1% in premarket trading action this morning. Last night the social media giant crushed analyst expectations ($5.33 vs street $4.82). More importantly, Meta announced that it is going to start paying a quarterly dividend, a sign from management that it expects to continue earning profits. This move may also make the shares available to investors who only hold dividend paying stocks.

The reaction to other companies which reported results overnight and this morning has been mixed. Other Magnificent Seven reporters include Apple ($2.18 vs street $2.10, down 3.4% premarket), and ($1.00 vs street $0.79, up 7.1% premarket). Despite Big Oil beating the street on earnings, trading in ExxonMobil ($2.48 vs street $2.20, down 0.6% premarket), and Chevron ($3.45 vs street $3.19, up 0.7% premarket) has been subdued. Big Pharma names reporting today like Bristol-Myers Squibb and Abbvie are up 0.5%-1.5% in premarket action. 

Headline economic news has also been positive. US Nonfarm Payrolls came in well above street expectations (353K vs street 180K), and for the first time in a year, last month’s payrolls were revised upward (333K vs previous 216K). This continues a stream of positive intraday numbers that included Canada Manufacturing PMI (48.3 vs previous 45.4), US ISM Manufacturing PMI (49.1 street 47.0), and US construction spending (0.9% vs street 0.5%) all beating expectations.

Inflation numbers are concerning, however as today’s US average hourly earnings (4.5% vs street 4.1%, previous revised up to 4.4% from 4.1%), and yesterday’s ISM Prices Paid (52.9 vs street 46.9) numbers suggested inflation may be starting to accelerate again. US factory orders (street 0.2% vs previous 2.6%) are due at 10:00 am EST. Monday brings Service PMI reports from around the world.

On the other hand, China-sensitive markets are under pressure again today. Hong Kong fell 0.2% and Shanghai fell 1.5% overnight. Despite OPEC+ extending production cuts through the first quarter (perhaps because they didn’t cut more), WTI and Brent Crude Oil are both down about 0.7%, as is Copper.

*Shares of Meta Platforms are held in portfolios managed by SIA Wealth Management.

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