Day Traders Diary

2/2/23

The major averages closed mixed with the Dow Jones dropping 39 points while the S&P 500 rose 60 points or 1.4% while the Nasdaq jumped 284 points or 3.2% thanks to better-than-expected Meta results further improved sentiment around technology shares, which led the market lower last year.

Some momentum came out of the day's gains as bond yields traded off their lows. Meta surged more than 24% in its best day since 2013 after reporting a fourth-quarter beat on revenue and announcing a $40 billion stock buyback. That helped investors look past losses in the business unit overseeing the metaverse.

Other mega-cap tech stocks rose on the back of those results. Shares of Google-parent Alphabet were up more than 5%, while Amazon jumped more than 6%. Apple shares gained more than 2%.

Tech stocks have outperformed in 2023, buoyed by recent signals of cooling inflation that investors expect could lead to a pause from the Federal Reserve in its aggressive rate hiking campaign. The S&P 500 information technology sector is up more than 13% this year after a decline of more than 28% last year.

"It's showing that growth is outperforming value as it unwinds some of the pressures that hawkish rhetoric brought to risk markets over the course of 2022," said Keith Buchanan, senior portfolio manager at GLOBALT Investments.

Wall Street is coming off a winning session after the Fed on Wednesday announced a 0.25 percentage point interest rate hike. While the central bank gave no indication of an upcoming pause in rate hikes, investors were encouraged by the smaller increase and Chair Jerome Powell's comments recognizing easing inflation.

Economists, on average, expect the Friday data to show 187,000 jobs were added in January, according to Dow Jones estimates. Though, Thursday afternoon Goldman economists said payrolls could be as high as 300,000, a big number that could mean the Fed has further to go to cool the economy and curb inflation.