- Brian Turner
- 03 Feb, 2023
- New York City
The U.S. economy added 517,000 net new jobs in January, the strongest gains since July 2020, the Bureau of Labor Statistics reported Friday.
Net job additions in the non-farm payrolls were not expected to rise above 175,000 according to several economists and surpassed December's 260,000 net gains.
In a widespread job addition, the leisure and hospitality industry led the expansion with an addition of 128,000 followed by 82,000 gains in professional and business services, 58,000 in healthcare, 30,000 in retail trade and 25,000 in construction.
Governments at all levels also added 74,000 net new jobs, partially reflecting the return of 48,000 academic workers at the University of California.
The January report offers critical insight in the labor market as several large tech companies announce substantial layoffs as companies recalibrate business outlook and prepare for economic slowdown.
January job gains were ahead of the monthly average of 401,000 in 2022.
Both the unemployment rate, at 3.4%, and the number of unemployed persons, at 5.7 million, changed little in January.
The unemployment rate has shown little net movement since early 2022 and dropped to the lowest level since 1969.
Labor force participation rate edged higher to 62.4%, but still below the pre-pandemic level of 63.6%.
Wages rose 0.3% in January from the previous month and eased to 4.4% pace from a year ago from 4.6% in December.
In January, average hourly earnings for all employees on private nonfarm payrolls rose 10 cents, or 0.3%, to $33.03, an increase of 4.4% from a year ago.
In January, average hourly earnings of private sector production and nonsupervisory employees rose 7 cents or 0.2% to $28.26.
Jobs gains in November and December were revised higher by a total of 71,000, the report from the Labor Department noted.
The government agency also revised higher total jobs added over 12 months to March by 568,000, based on more complete tax-records and reflecting annual revision.
- Barry Adams
- 03 Feb, 2023
- New York City
Financial markets turned cautious after the U.S. economy added jobs at a surprisingly faster pace.
The pace of addition was last seen nearly two years ago and jobless rate dropped to a five-decade low.
Despite the tight labor market conditions, employment participation rate remained weak, making the Federal Reserve's task harder in balancing economic growth while controlling inflation.
U.S. Hirings Surged, Jobless Rate Dropped to 53-year Low
The U.S. economy added 517,000 net new jobs in January, the strongest gains since July 2020, the Bureau of Labor Statistics reported Friday.
Net job additions in the non-farm payrolls were not expected to rise above 175,000 according to several economists and surpassed December's 260,000 net gains.
In a widespread job addition, the leisure and hospitality industry led the expansion with an addition of 128,000 followed by 82,000 gains in professional and business services, 58,000 in healthcare, 30,000 in retail trade and 25,000 in construction.
Governments at all levels also added 74,000 net new jobs, partially reflecting the return of 48,000 academic workers at the University of California.
The January report offers critical insight in the labor market as several large tech companies announce substantial layoffs as companies recalibrate business outlook and prepare for economic slowdown.
January job gains were ahead of the monthly average of 385,000 in 2022, reflecting the latest revisions in data for the last two months of 2022.
Both the unemployment rate, at 3.4%, and the number of unemployed persons, at 5.7 million, changed little in January.
The unemployment rate has shown little net movement since early 2022 and dropped to the lowest level since 1969.
Labor force participation rate edged higher to 62.4%, but still below the pre-pandemic level of 63.6%.
Wages rose 0.3% in January from the previous month and surged 4.4% from a year ago.
U.S. Indexes In Review
The S&P 500 index decreased 0.2% to 4,173.08 and the Nasdaq Composite index declined 0.1% to 12,190.85.
Crude oil inched lower by $2.0 to $73.91 a barrel and natural gas futures for immediate month delivery fell 10 cents to $2.35 a thermal unit.
The yield on 2-year treasury notes inched higher to 4.27%, 10-year treasury notes edged higher to 3.52% and 30-year treasury bonds to 3.62%.
U.S. Movers
Alphabet Inc declined 4% to $103.29 after the parent of Google reported a decline in earnings driven by general weakness in advertising revenue and a larger decline in video ads on its popular YouTube platform.
Alphabet Inc said revenue in the December quarter rose 1% to $76 billion and net income plunged 34% to $13.6 billion from $20.6 billion and diluted EPS dropped to $1.05 from $1.53 a year ago.
Amazon.com, Inc dropped 6.3% to $112.91 after the online retailer reported a sharp plunge in earnings partly driven by writing down the value of its stake in the electric vehicle maker Rivian Automotive.
Amazon.com said sales in the fourth quarter increased 9% to $149.2 billion and net income fell to $0.3 billion from $14.3 billion and diluted EPS fell to 3 cents from $1.39 from a year ago.
North America sales increased 13% from a year ago to $315.9 billion and international sales fell 8% to $118.0 billion, or increased 4% excluding changes in foreign exchange rates.
AWS segment sales increased 29% from a year ago to $80.1 billion.
Net sales in full-year 2022 increased 9% to $514.0 billion from $469.8 billion in 2021.
Net loss was $2.7 billion in 2022 or $0.27 per diluted share, compared to net income of $33.4 billion, or $3.24 per diluted share in 2021.
Apple Inc declined 1.6% to $148.26 after the computing devices maker reported a rare quarterly revenue decline and fell for the first time since 2019.
Apple Inc said revenue in the December quarter fell 5% from the previous year to $117.2 billion.
Net income dropped 13.2% to $30 billion from $34.6 billion and diluted EPS fell to $1.88 from $2.10 a year ago.
- Scott Peters
- 03 Feb, 2023
- New York City
Alphabet Inc declined 4% to $103.29 after the parent of Google reported a decline in earnings driven by general weakness in advertising revenue and a larger decline in video ads on its popular YouTube platform.
Alphabet Inc said revenue in the December quarter rose 1% to $76 billion and net income plunged 34% to $13.6 billion from $20.6 billion and diluted EPS dropped to $1.05 from $1.53 a year ago.
Amazon.com, Inc dropped 6.3% to $112.91 after the online retailer reported a sharp plunge in earnings partly driven by writing down the value of its stake in the electric vehicle maker Rivian Automotive.
Amazon.com said sales in the fourth quarter increased 9% to $149.2 billion and net income fell to $0.3 billion from $14.3 billion and diluted EPS fell to 3 cents from $1.39 from a year ago.
North America sales increased 13% from a year ago to $315.9 billion and international sales fell 8% to $118.0 billion, or increased 4% excluding changes in foreign exchange rates.
AWS segment sales increased 29% from a year ago to $80.1 billion.
Net sales in full-year 2022 increased 9% to $514.0 billion from $469.8 billion in 2021.
Net loss was $2.7 billion in 2022 or $0.27 per diluted share, compared to net income of $33.4 billion, or $3.24 per diluted share in 2021.
Apple Inc declined 1.6% to $148.26 after the computing devices maker reported a rare quarterly revenue decline and fell for the first time since 2019.
Apple Inc said revenue in the December quarter fell 5% from the previous year to $117.2 billion.
Net income dropped 13.2% to $30 billion from $34.6 billion and diluted EPS fell to $1.88 from $2.10 a year ago.
Ford Motor Company declined 10% to $12.88 after the automaker missed its quarterly earnings and the management struggles to deal with long-term operating inefficiencies and persistent underperformance.
Ford Motor said revenue in the December quarter rose 17% from a year ago to $44 billion.
Net income plunged to $1.3 billion from $12.3 billion and diluted EPS fell to 32 cents from $3.02 a year ago.
Sally Beauty Holdings Inc declined 0.5% to $17.87 after the beauty products retailer reported a drop in earnings because of restructuring charges.
Sally Beauty said December quarter revenue declined 2.4% from the previous year to $957 million.
Net income dropped 27% to $50.3 million from $68.8 million and diluted earnings per share fell to 46 cents from 60 cents a year ago.
Skechers USA Inc fell 5.2% to $46.67 after the footwear retailer forecasted first quarter earnings and sales outlook that missed some investors expectations.
Skechers said the fourth quarter revenue increased 13.5% from a year ago to $1.88 billion.
Net income plunged to $75.5 million from $402.4 million and diluted earnings per share dropped to 48 cents from $2.56 a year ago.
Skechers guided first quarter revenue between $1.80 billion and $1.85 billion and diluted earnings per share between 55 cents and 60 cents a share and full EPS between $2.80 and $3.0.
Starbucks Corporation declined 3.6% to $105.14 after the coffeehouse chain operator reported weaker-than-expected quarterly results as China's "zero-covid" policy impacted sales.
Starbucks said revenue in the December quarter rose 8% from the previous year to $8.7 billion.
Net income increased 4.8% to $855 million from $816 million and diluted earnings per share rose to 74 cents from 69 cents a year ago.
North America and U.S. comparable store sales increased 10%, driven by a 9% increase in average ticket and a 1% increase in comparable transactions.
International comparable store sales fell 13%, driven by a 12% decline in comparable transactions and a 1% decline in average ticket.
China comparable store sales decreased 29%, driven by a 28% decline in comparable transactions and a 1% decline in average ticket.
At the end of 2022, stores in the U.S. and China comprised 61% of the company’s global portfolio, with 15,952 stores in the U.S. and 6,090 stores in China.
Qualcomm Inc fell 0.6% to $135.10 after the chip maker's guidance indicated more struggles for the company reflecting ongoing weakness in the industry.
Qualcomm said revenue in the December quarter declined 12% to $9.5 billion.
Net income fell 34% to $2.2 billion and diluted earnings per share dropped to $1.98 from $2.98 a year ago.
In the December quarter, Qualcomm returned $2.1 billion to stockholders, including $842 million, or 75 cents a share in dividends and $1.3 billion through repurchases of 11 million shares.
Qualcomm guided fiscal second quarter revenue between $8.7 billion and $9.5 billion and diluted earnings per share between $1.53 and $1.73.
- Barry Adams
- 02 Feb, 2023
- New York City
Investors bid up tech stocks and extended a five-weeklong rally a day after the rate hike.
In heavy volume reminiscent of bygone days, investors stomped to increase exposure to beaten down tech stocks and search for bargains.
Meta Platforms, the owner of WhatsApp, Facebook and Instagram, finally showed financial restraint and said it will cut its cost at a faster pace and reward shareholders with a buyback plan.
The news powered the beaten down Meta stock in decline for the last sixteen months, which traded as high as $379 in September 2021 and as low as $90 in November last year.
Investors focused on corporate earnings after another batch of 130 companies released results and the familiar theme played out.
Weakening construction activities in December, looking recession worries, sharp fall in advertising and strong dollar impacted companies across all sectors.
Investors focused on not-so-weak economic growth in the U.S. and Europe and surmised that despite the elevated energy prices and four-decade high inflation, consumer spending is still resilient.
The ECB President Christine Lagarde at a press conference after the rate decision held out for a rebound in economic growth driven in part by a rise in wages towards the end of the year.
Tech stocks took the lead on the leaderboard across the Atlantic and powered market rallies in the U.S., Germany, France and the UK.
U.S. Indexes In Review
The S&P 500 index increased 1.5% to 4,179.76 and the Nasdaq Composite index soared 3.3% to 12,200.82.
Crude oil traded down 45 cents to $75.95 a barrel and natural gas futures decreased 7 cent to $2.45 a thermal unit.
Treasury Yields Dropped to 4-month Lows
U.S. Treasury yield traded lower after Fed Chairman Jerome Powell directed his comments to labor market conditions and acknowledged cooling inflation.
Optimist investors prolonged the hopes of either Fed pausing or lowering its aggressive rate hike stance and demanded lower yields on the U.S. government bond obligations.
The yield on 2-year Treasury notes decreased to 4.09%, 10-year Treasury notes to 3.39% and 30-year Treasury bonds to 3.55%
U.S. Movers
Meta Platforms, Inc soared 18.8% to $181.86 after the social media sites operator reported higher-than-expected quarterly results.
Advertising impressions delivered across all sites increased 23% and the average price per ad decreased 22% from the previous year.
For the full-year 2022, ad impressions increased 18% and the average price per advertising impression fell 16% from the previous year.
Meta Platforms said revenue in the December quarter declined 4% to $32.2 billion and net income fell 55% to $4.6 billion from $10.3 billion and diluted EPS dropped to $1.76 from $3.67 a year ago.
The company estimated first quarter 2023 revenue in the range of $26 billion and $28.5 billion and revised lower its full-year 2023 expenses estimate to between $89 billion and $95 billion from $94 billion to $100 billion.
The company announced a $40 billion stock repurchase plan after completing a $28 billion stock buyback plan in 2022.
Estee Lauder Companies Inc declined 1% to $276.96 after the cosmetic company said travel restrictions in Asia and mainland China impacted its business.
Estee Lauder said the fourth quarter revenue declined 17% to $4.6 billion and net income fell 64% to $397 million and diluted EPS declined to $1.09 from $2.97 a year ago.
The company guided full-year fiscal 2023 sales to decline between 5% and 7% and GAAP diluted earnings per share between $4.25 and $4.44.
Humana Inc fell 3.9% to $492.50 after the health insurance company reported higher quarterly loss.
Euro and Pound Soar to Multi-moth Highs After Rate Hikes
European markets soared after the European Central Bank and the Bank of England lifted key lending rates as advertised and investors welcomed dovish comments from Fed Chairman.
The European Central Bank lifted its benchmark rates but also reiterated its commitment in an unusually strong language to increase rate at the meeting next month
The European Central Bank revised its benchmark rate higher by 50 basis points to 3.0%, the level last seen in 2008 and confirmed its plan to increase by the same at the next policy meeting in March.
The Bank of England decided to increase its benchmark rate in a 7-to-2 vote by 50 basis points to 4.0%, the highest level since 2008 as policymakers battle to control forty-year high inflation.
Markets anticipated central banks actions and investors are also anticipating higher rates at next meetings in March but the recent cooling in inflation also raised hopes that policymakers may pause near the year's end.
European Indexes Advanced Between 1% and 2%
The DAX index soared 2.2% to 15,509.19, the CAC-40 index increased 1.2% to 7,166.27 and the FTSE 100 index added 0.8% to 7,820.16.
Euro Rebounds to 10-month High
The euro advanced to $1.09, the British pound inched higher to $1.22 and the Swiss franc edged up to 91.25 U.S. cents.
Natural Gas Price Drops to 16-month Low
Natural gas price in Amsterdam traded down to a 16-month low amid warm weather conditions and elevated storage in the region.
Natural gas prices continued to drift lower for the sixth week in a row after regional forecasts indicated warmer weather conditions from Scandinavia to Italy for the next week despite a mild uptick in temperatures this week.
Brent crude oil decreased 24 cents to $82.60 a barrel and Dutch TTF spot price fell 6.3% to 55.61 per MWh.
Europe Movers
Shell Plc fell 1% to 2,341.0 pence after the oil giant reported record annual profit and launched a $4 billion stock repurchase program.
Revenue in the fourth quarter increased to $101 billion from $85 billion a year ago after energy prices spiraled higher.
Net income in the quarter eased to $10.4 billion from $11.5 billion and diluted earnings per share eased to $1.46 from $1.48.
In 2022, revenue surged to $381 billion from $261.5 billion and net income soared to $42.3 billion from $21.5 billion and diluted earnings per share to $5.71 from $2.57 a year ago.
Full year 2022 income attributable to shareholders also included net gains of $3.4 billion due to the fair value accounting of commodity derivatives.
Windfall taxes imposed by the European Union and the UK also negatively impacted earnings.
The net income also included $2.3 billion charges related to the "EU solidarity contribution" and the UK "Energy Profits Levy," and net impairment reversals of $0.7 billion.
The oil company said it has completed its $4 billion stock repurchase program announced in the previous quarter and the company expects to complete a new $4 billion plan before the release of current quarter's results.
Shell also increased its dividend by 15% to 28.57 a share.
Wizz Air Holdings increased 5% to 2,787.16 pence after the deep discount airline said the number of passengers in January rose 71.3% from a year ago to 4.2 million.
Deutsche Bank AG fell 6.3% to €11.46 after the largest German bank reported weaker-than-anticipated quarterly income.
Revenue in 2022 rose 7% to € 27.2 billion and pre-tax income increased 65% to €5.6 billion, the highest in 15 years.
Net profit in the year more than doubled from a year ago to €5.7 billion including positive year-end deferred-tax adjustment of €1.4 billion compared to €274 million in the previous year.
In the fourth quarter of 2022, profit before-tax was €775 million, up from €82 million a year ago on 7% growth in net revenues with a 7% reduction in noninterest expenses.
The quarter was positively impacted by a gain of approximately €310 million on the sale of Deutsche Bank Financial Advisors in Italy.
ING Groep NV declined 5% to €12.70 after the Dutch bank issued a weaker-than-anticipated 2023 outlook.
Banco Santander SA increased 5% to €3.43 after the Madrid-headquartered bank reported a surge in net profit.
Total income in the fourth quarter increased 0.4% to €13.5 billion and net income after-tax rose decreased 5% to €2.23 billion from the previous quarter.
Total income in 2022 rose 15.7% to €52.1 billion and net income rose 18.2% to €9.6 billion.
Electrolux AB dropped 8% to kr133.70 after the Sweden-based electrical appliances maker estimated lower sales volume in 2023.
In full-year 2022, net sales were SEK 134,880 million and operating income excluding non-recurring items was SEK 831 million.
Earnings declined due to lower sales volumes, as a result of weaker market demand, and production inefficiencies lifted costs higher in North America.
In the fourth quarter, net sales amounted to SEK 35,769 million and operating income was a loss of to SEK 1,964 million, reflecting a negative operating margin of 5.5%
Asian Markets Edged Higher
Asian markets advanced after rate anxieties eased and investors shifted focus to local economic data and corporate earnings.
Stocks in Tokyo advanced despite the worries of stronger yen weighed on market sentiment.
The Nikkei 225 index increased 0.2% to 27,402.05 and the yen strengthened to 127.05 against the U.S. dollar.
Benchmark indexes in China held steady ahead of a slew of corporate earnings next week.
The Shanghai Composite index increased 0.75 points to 3,285.67 and the Hang Seng Index fell 0.5% or 113.82 points to 21,958.36.
At least 89 e-commerce startups in China closed down in 2022, according to a report published by Linkshop.com.
Weak consumer spending, rising online fraud and poor customer service were the leading three reasons for corporate failures.
Last week, the Ministry of Commerce in China said e-commerce grew by 4% to 13.79 trillion yuan or $2.04 trillion.
Adani Group stocks accelerated decline for the second week in a row on the worries of regulatory hurdles and closer scrutiny to slow down company's efforts in raising capital.
The Sensex index increased 0.4% or 224.16 points to 59,932.24 and the Nifty index edged down 0.03% or 5.90 points to 17,610.40.
The Indian rupee edged lower to 82.15 against the U.S. dollar.