Record High – Monday Morning Market Memo – February 5, 2024

Record High – Monday Morning Market Memo – February 5, 2024

The Standard & Poor’s 500 Index closed at a fresh record high last Friday after earnings reports from some high-profile mega cap technology companies beat estimates and the January Jobs Report came in stronger-than-expected.

Shares of Meta Platforms (formerly named Facebook) jumped more than 20% after announcing a stock buyback program, initiation of a quarterly dividend, and earnings that exceeded market expectations. saw its shares pop 8% higher after they beat on both earnings and revenues.  Even though Apple also beat on earnings, they missed out on the Friday rally after reporting a 13% sales decline in China.  In total, earnings beats and share price advances in these large tech companies were so eye-catching, the market was in the mood to view a much stronger-than-expected jobs report as actually being good news!

The U.S. Department of Labor reported the economy added 353,000 jobs last month.  This blew past estimates for a print of 175,000.  Additionally, job gains for the prior two months were revised higher by 126,000.  The strength of this jobs report along with commentary from Federal Reserve Chair Powell last week, dramatically changed the outlook for upcoming interest rate cuts by the Fed.  The financial markets are no longer expecting a rate cut in March.  Expectations for a rate cut have now been moved from March to May, or the second half of this year.

According to the CME FedWatch Tool, the probabilities of a March rate cut are now only 16.5%, down from about 50% a week ago, and nearly 70% a month ago.  Markets are now digesting and coalescing around the idea the first rate cut is not right in front of us.  Rate cuts coming later rather than sooner, would normally be bad news for equity prices (as the stock market likes lower interest rates).  However, the mood of the market last week, and we believe rightfully so, was that good economic news is better than the Fed having to cut rates because of a slowing economy.  Investors leaned into the positives of a resilient economy that could boost stock prices, as opposed to the negative that the timetable for rate cuts is now farther away.

For the week, all three major stock market averages gained ground.  The Standard & Poor’s 500 Index rose 1.4% to a new record high of 4,959.  The Dow Jones Industrial Average also added 1.4%, to close at its own record high of 38,654.  The NASDAQ Composite gained 1.1% to 15,629.  All three indices are now working a 4-week winning streak.  It is always more enjoying reaching out and writing these memos when things are going well, and stocks are hitting new highs.

Keep in mind however, that stocks, along with all other asset classes, go both up and down.  The stock market is often described as having a manic-depressive personality.  Our advice is to feel and act neither euphoric during Bull Markets (good times) or depressed during Bear Markets (bad times).  Stay the course that is right for your unique financial picture – considering your goals, objectives, cash-flow needs, risk capacity and risk tolerance – remember investing is a marathon, not a sprint!


As always, don’t hesitate to contact us with any questions or if you would like to set up a meeting.


All the best – Southport Station Financial Management, LLC