Wall Street capped off a successful week on Friday, marking its 12th winning week out of the last 13, as investors eagerly anticipated the Federal Reserve's upcoming decision and Chair Jay Powell's remarks. While the market closely watched the central bank, it was the quarterly reports from tech giants Apple, Microsoft, Amazon, Meta, and Alphabet that stole the spotlight, potentially overshadowing the Fed's impact.
On Friday, however, the stock market experienced a minor setback in New York, Hong Kong, and Tokyo. The S&P 500 slipped 0.1% to close at 4,890.97, ending a six-day winning streak, during which it set record highs for five consecutive days. The Dow Jones Industrial Average rose by 0.2% to 38,109.43, while the Nasdaq lost 0.4% to finish the week at 15,455.36, primarily due to a weak forecast from chip giant Intel, which saw its stock plummet by 12%.
Despite Friday's mixed performance, all major indices recorded positive weekly gains. The S&P 500 gained 1.06%, the Nasdaq Composite climbed 0.94%, and the Dow Jones was up by 0.65%. As January comes to a close, the Dow has gained 1%, the S&P 500 is up 3.1%, and the Nasdaq has surged by more than 4.6%, largely driven by Nvidia's remarkable 26% gain.
In Asian markets, Hong Kong's Hang Seng declined 1.6%, giving back some of its gains from the week, which were boosted by Chinese authorities' efforts to stabilize markets, especially troubled property companies, which might receive loan forgiveness and new funding from banks. The Hang Seng still managed to rise nearly 4% for the week, while the Shanghai market added nearly 3%, and the blue-chip CSI 300 index gained 2.2%. These gains came after sharp falls on Monday prompted immediate government and central bank intervention. However, the CSI 300 remains down more than 2% for the year, and the Hang Seng is off nearly 5%.
Japan's Nikkei 225 also fell by 1.3%, trimming its year-to-date gains despite being up by 7.4%. In Australia, the ASX 200 added approximately 2.8% last week.
Looking ahead to the coming week, the futures market anticipates a positive start, with a 26-point gain predicted for the S&P 500. However, the week's performance will depend on several factors, including the quarterly results from major US tech companies, inflation data in the US, and the Federal Reserve meeting in Washington, which is set to conclude early Thursday morning.
In summary, despite some turbulence in global markets, Wall Street remains resilient as it looks forward to pivotal events in the upcoming week, where tech earnings and Fed decisions will likely dictate the market's direction.
Economic Data Supports Wall Street Amid Tech Earnings
New York, NY – January 28, 2024
Wall Street ended the week on a positive note, despite a minor dip in the S&P 500 on Friday. Encouraging economic data played a significant role in bolstering investor confidence throughout the week.
The S&P 500 closed slightly lower on Friday, edging down by 0.07%, while the Dow Jones Industrial Average added 0.16%, gaining 60.30 points. The Nasdaq Composite slipped by 0.36%, largely impacted by a post-earnings decline in Intel shares.
Throughout the week, the major indices recorded overall gains. The S&P 500 advanced by 1%, the Nasdaq Composite climbed by 0.9%, and the Dow Jones Industrial Average increased by 0.7%. Notably, both the S&P 500 and Nasdaq had enjoyed six consecutive winning sessions before Friday's minor setback.
Investor sentiment was largely boosted by favorable economic data. December's core personal consumption expenditures (PCE) price index met economists' expectations month-over-month but fell slightly below annualized forecasts. The core PCE price index is a preferred indicator of inflation for the Federal Reserve. Additionally, GDP data for the fourth quarter showed stronger-than-expected economic growth, fueling optimism that the economy may avoid a deep recession.
Rhys Williams, Chief Strategist at Spouting Rock Asset Management, commented on the positive economic data, stating, "All the economic data — both the GDP and PCE — was good this week. That was comforting to everybody. And I think it does show we're still in this potential 'Goldilocks' landing, where the economy softens a bit but is still positive."
However, some well-known stocks faced sell-offs following disappointing earnings reports. Chipmaker Intel, for instance, saw its stock tumble by nearly 12% after offering a lackluster fiscal first-quarter outlook. Semiconductor company KLA also experienced a nearly 6% decline after posting a light guidance for its fiscal third quarter.
On the other hand, American Express enjoyed a rally, surging by more than 7% after presenting a better-than-expected full-year earnings forecast. This helped offset losses resulting from Intel's decline.
One significant loser of the week was Tesla, a darling among retail investors, which faced its worst week since October. Tesla's shares dropped following disappointing earnings and warnings of potential challenges in 2024.
As Wall Street heads into the next week, all eyes are on the forthcoming tech earnings reports, with Alphabet, Amazon, Apple, Meta, and Microsoft all scheduled to release their quarterly results. These reports will be closely watched by investors who have praised the cost-cutting measures implemented by these companies in response to rising inflation, interest rate hikes, recession concerns, and the turbulent market conditions of 2022.
In conclusion, Wall Street's performance remains resilient, with strong economic data providing support despite occasional setbacks from individual company earnings reports.
Tech Sector Faces Layoffs Amid Market Highs
New York, NY – January 28, 2024
While the stock market reaches record highs and the tech sector enjoys renewed investor enthusiasm, many tech companies are downsizing at an accelerating pace. The surge in layoffs is particularly notable in January, with thousands of tech workers losing their jobs, according to data from Layoffs.fyi.
In January 2024, approximately 23,670 employees from 85 tech companies have been laid off, marking the highest number of tech job cuts since March of the previous year when nearly 38,000 tech industry workers were let go.
The tech industry faced its peak layoffs in January 2023 when 277 technology companies reduced their workforce by almost 90,000 employees. Most of these job cuts occurred during the first quarter of 2023, followed by a decline in layoffs each month until September, after which the numbers began to rise again towards the end of the year.
Despite the stock market's positive performance, tech companies are taking measures to streamline their operations and control costs. High-profile layoffs this month include SAP, which announced job changes or layoffs for 8,000 employees, and Microsoft, which cut 1,900 positions in its gaming division. Fintech startup Brex also laid off 20% of its workforce, while eBay slashed 1,000 jobs, equivalent to 9% of its full-time workforce