Day Traders Diary

2/3/23

The major averages sold off on Friday as a strong jobs report worried some investors the Federal Reserve would keep hiking rates. The S&P 500 finished down 43 points or 1%, while the Nasdaq Composite declined 193 points or 1.5%. The Dow Jones Industrial Average fell 127 points, or about 0.38%, despite gains in Apple shares.

The S&P 500 and Nasdaq Composite still generated positive weeks. The S&P 500 was up more than 1% this week. The Nasdaq Composite gained more than 3% this week, on pace for its fifth-straight winning week as it rode a tech-fueled rally to outperform the other major indexes. The Dow was down modestly.

Investors absorbed a stronger-than-expected January jobs report that spurred bond yields higher. The U.S. economy added 517,000 jobs in January, blowing past Dow Jones estimates of a jobs gain of 187,000 last month. The 10-year Treasury yield topped 3.5% after jumping 12 basis points following the report.

Wall Street also digested earnings results from major tech companies. Apple shares jumped about 4%, reversing earlier losses after missing estimates on the top and bottom lines in its most recent quarterly report. Meanwhile, Google-parent Alphabet fell about 0.3% following disappointing results. Amazon's stock also declined more than 8% after the e-commerce giant's report.

Even so, investors took hope from recent signs of falling inflation, as well as some well-received comments this week from Federal Reserve Chair Jerome Powell saying the disinflationary process has begun.

"I think the market's coming closer to our view that inflation is declining rapidly," said Jay Hatfield, CEO at Infrastructure Capital Management. "[The Fed's] models have proven to be terrible. They missed this inflation on the upside, and now they're missing the deflation."