Week of February 6, 2021

With a week packed full of economic data, the US markets were mixed, with the Dow Jones Industrial Average and S&P 500 closing the week -0.16% and 1.64% respectively.  The tech heavy Nasdaq is on a five-week winning streak and had a strong rally up 3.31% after the Federal Reserve’s comments to slow the pace of interest rate hikes.  This was the fourth week of gains for the S&P 500 as earnings continue to be reported, with 70% of S&P 500 companies beating analysts’ expectations. 

The Federal Open Market Committee had its first meeting for 2023 on January 31 and February 1.  Investors were expecting and received a 0.25% increase taking the target range to 4.5%- 4.75%.  This was the smallest rate hike since March of last year.  Federal Reserve Chairman Jerome Powell stated, “Inflation data received over the past three months show a welcome reduction in the monthly pace of increases….while recent developments are encouraging, we will need substantially more evidence to be confident that inflation is on a sustained downward path.”

The January jobs report was released late last week with nonfarm payrolls increasing by 517,000, overwhelmingly higher than the estimated 187,000.  The employment data continues to remain strong, with this report being the largest gain since July of 2022.  Unemployment also beat estimates of 3.6%, reporting at 3.4% and labor participation improving slightly to 62.4%.

This week earnings will continue to be reported, with some major companies such as Disney, Chipotle, Dupont and PepsiCo scheduled to report.  The tech industry continues with layoffs as orders for PC’s were down 28% year over year.  On Monday, Dell reported it would lay off about 5% of its workforce. Federal Reserve Chairman Jerome Powell is set to speak before the Economic Club of Washington on Tuesday and investors are anticipating him expanding on his comments regarding a disinflationary environment.