The Buzz on Business for Monday, February 5th, 2024.
Another new record high for the Dow. Another new record high for the S&P 500. Another two-year high for the NASDAQ Composite. There was some really good economic news. Sure. But the rally on Friday seems to have been propelled by Facebook.
Stock Market Report
The headline large-cap indexes all did very well indeed on Friday, but generally, stocks finished mixed as advances led decliners by a fair amount.
- The Dow Jones Industrials finished at 38,654. That's a new all-time high. They were up four-tenths of a percent for a gain of 135 points.
- The Standard and Poor's 500 was up 1.1%. A pretty good day for the S&P. They closed at 4,959, up 52 points.
- The NASDAQ composite was up a stout 1.7 percent, 267 points, and they closed at 15,629.
- The Russell 2000 had a tougher go of it. It was down 3/4 of a percent and closed at 1,957, off 15 points.
- In an indication of how thin the rally was, while the market-cap weighted S&P 500 was up over one percent, the RSP--that's the equal weight S&P 500 index—was down, down on a strong up day, just a little bit, about one-tenth of a percent. The SOXL was up 3.7%.
Bond Market Report
Rates were up across the board on Friday and by a significant amount. Also, the 2-year/20-year spread has inverted. That’s not a good sign.
- The 2-year treasury closed with a yield of 4.372%, that's up 18 basis points.
- The 20-year was up 13 ticks and closed at 4.333%.
Oil, Gold, and Bitcoin
- Oil continued its freefall. It was off $1.53 and closed at $72.31.
- Gold was likewise off. It closed at $2053.70, off $17.40.
- And finally, Bitcoin was also down. It closed at $43,062.30, off $48.33.
Labor Market Stays Strong
Lots of good news from the economic calendar on Friday.
- Average hourly earnings grew by 4.5% year over year in January. That's versus expectations of 4.1% and December's number of 4.3%.
- The month-over-month number was equally as strong. Wages grew in January by 0.6% versus expectations of 0.3% and December’s number of 0.4%.
- The unemployment rate was expected to come in at 3.8%. It ticked down to 3.7%.
- But the headline number was nonfarm payrolls. In January, the economy created 353,000 new jobs. That's versus expectations of just 187,000 and 333,000 last month. So directionally and versus expectations, the labor market and especially job creation is headed in the right direction.
Facebook has a YIELD!
Perhaps the biggest story of the day on Friday was Facebook. Facebook's parent, Meta, announced blowout earnings on Thursday after the bell. The company earned $5.33 a share versus expectations of $4.96 a share. And revenue of $40.1 billion versus expectations of $39.02. But the big story is Meta announced it was going to begin paying dividends to shareholders. That’s a big step for growth companies that tend to invest whatever cash they have into growing the business.
Given its new status as a dividend-paying stock, Meta dramatically increased its potential shareholder base. Many mutual funds and pension plans are limited to the amount they can invest in non-dividend-paying stocks.
Facebook went to the moon. Actually, that was a moon circling a planet in the Alpha-Centuri system. Meta was up over $80 a share, over 20% on the day.
Earnings season kicks into another gear this week, although the economic calendar is a bit more subdued. Whatever is reported, you can be sure we will have it for you right here, on the Buzz.
