Stock Market News for Feb 8, 2021
Wall Street closed higher on Friday despite a not so impressive jobs data. However, moderate job growth has boosted investors' expectation of Congress to legalize $1.9 trillion of a fresh round of fiscal stimulus proposed by President Biden. Meanwhile, the last week was an impressive one with all the three major stock indexes rallied strongly.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.3% to close at 31,148.24. Notably, 21 components of the 30-stock index ended in the green while 9 in red. The blue-chip index is just 0.4% away from its all-time intraday high of 31,272.22 recorded on Jan 21.
Blue-chip stocks like Nike Inc. NKE) and Cisco Systems Inc. CSCO surged 3.2% and 1.8%, respectively. Both stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Nasdaq Composite finished at 13,856.30, gaining 0.6% due to strong performance by large-cap tech stocks. This was the tech-heavy index's eighth all-time high closing this year. During intraday trading, the tech-laden index recorded an all-time high at 13,878.16.
Meanwhile, the S&P 500 advanced 0.4% to end at 3,886.83, reflecting its seventh all-time closing high this year. The Communication Services Select Sector SPDR (XLC) and the Materials Services Select Sector SPDR (XLB) surged 1.3% and 1.8%, respectively. Notably, ten out of eleven sectors of the benchmark index closed in the green and one in red. During intraday trading, the broad-market index recorded an all-time high at 3,894.56.
The fear-gauge CBOE Volatility Index (VIX) was down 4.1% to 20.87. A total of 13.65 billion shares were traded on Friday, lower than the last 20-session average of 15.5 billion. Advancers outnumbered decliners on the NYSE by a 2.33-to-1 ratio. On Nasdaq, a 1.94-to-1 ratio favored advancing issues.
Moderate Jobs Addition in January
The Department of Labor reported that the U.S. economy added 49,000 jobs in January, falling short of the consensus estimate of 82,000. Moreover, December's job loss were revised upward from 140,000 to 227,000. November’s gains were also revised lower to 264,000 from 336,000 reported earlier.
Major segments that added jobs in January were professional and business services, local governments, information, wholesale trade and mining/logging with 97,000, 43,000, 16,000, 14,000 and 9,000 jobs.
Average hourly earnings increased 0.2% in January after growing 1% in December. The consensus estimate was 0.3%. Average workweek was 35 in January compared with 34.7 in December.
Meanwhile, the unemployment rate declined to 6.3% in January compared with the previous month's data and the consensus estimate of 6.7%. The real unemployment rate that includes discouraged workers and those holding part-time positions for economic reasons also fell to 11.1% in January from 11.7% in December.
Expectations of Large Fiscal Stimulus
The Democrats are moving forward with President Joe Biden’s proposed $1.9 trillion Covid-19 relief package. The proposed plan will include increasing direct payments to $2,000 from the existing $600 and supplemental unemployment benefits to $400 per week through September. The proposal also mentions that the minimum wage rate would be hiked to $15 per hour.
Moderate job growth in January clearly indicates that the U.S. economy is still suffering from coronavirus-led devastations and full recovery will take a long time. Consequently, investors' expectations have strengthened that the Congress will clear the path of President Biden's proposed $1.9 trillion coronavirus-aid package in a law.
Other Economic Data
The Department of Commerce reported that the U.S. trade balance for the month of December was declined to $66.6 billion. The consensus estimate was $65.8 billion. November's data was revised upward from a decline of $68.1 billion to $69 billion.
Weekly Roundup
The last week was an impressive one for Wall Street. The three major stock indexes - the Dow, the S&P 500 and the Nasdaq Composite - rallied 3.9%, 4.7% and 6%, respectively. The CBOE VIX posted its biggest weekly decline pointwise since the week ended Nov 6.
The primary reason for last week's extreme volatility — a typical trading practice in which a few key heavily shorted stocks by hedge fund giants were favored by a group of individual investors organized via Reddit’s wallstreetbets forum — has evaporated this week. Moreover, a series of good economic data and news boosted investors' confidence.
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