Even with the announcement of labor report numbers that fell below expectations, markets still saw gains on Friday. The latest monthly unemployment data reported showed a decrease in the U.S. unemployment rate from 6.7 to 6.3 percent as more Americans stopped looking for work. Discouraged workers are not counted as unemployed if they give up on finding a job. The U.S. economy created 49,000 net new jobs in January, almost hitting the consensus forecast of 50,000 jobs.
On Friday, the S&P 500 saw a 0.39 percent increase, the Dow increased by 0.30 percent, and the Nasdaq gained 0.57 percent on the day. These were record closing highs for the S&P 500 and the Nasdaq. The Dow followed and nearly reached its recent record-high. This past week marked the top-performance of weekly gains for the Dow, Nasdaq, and S&P 500 since November 2020, with the S&P 500 the weekly-gain frontrunner among the indexes at a 4.6 percent increase.
The Russell 2000 Index likewise closed the week with a 1.4 percent gain on the day for a record daily closing. This represented the small-cap index’s top daily gain since June of last year and reflects the expected relatively quicker trajectory of small-cap stocks within the context of the broader U.S. economic recovery.
For the week, the Russell 2000 Index gained 7.70 percent, the Nasdaq 6.01 percent, the S&P 500 Index 4.65 percent and the Dow Jones Industrial Average 3.89 percent.
GameStop Corp. (GME), at the center of the current short-squeeze phenomenon, continued to hold the attention of traders over another volatile week of trading activity. GameStop closed on Friday with a 19.20 percent gain. While its daily close is well below the $483.00 record-high from late January, it still reflects a massive price surge of 177 percent since the rally took off this year. Online trading platform Robinhood announced Friday that it will no longer restrict trading activity for the stock, which allowed for another round of stock purchases and prompted a 50-percent price surge at a point.
For the week, the energy sector stood out in the S&P 500 as a top performer. Crude oil prices, which had a 10-percent rise on the week. On Friday, Crude Oil (CL=F) was up 1.49 percent an increase to $57.07 a barrel. The $60 per barrel benchmark is being closely monitored as an indicator of a probable increase in production levels. SPDR Energy (XLE) advance 8.24 percent. First Trust ISE Revere Natural Gas (FCG) climbed 9.04 percent.
Gold (GC=F) prices also posted an increase on Friday of 1.34 percent, closing at a $24 increase on the day to $1,815.20 an ounce. After its notable upward trend catching attention earlier in the week, Silver (SI=F) prices continued to close Friday with a gain of 3.05 percent on the day of $0.80 an ounce to $27.03.
The 10-year Treasury bond yield increased 1.8 basis points on Friday for the day to 1.157 percent.
SPDR Financials (XLF) advanced 6.66 percent, SPDR Consumer Discretionary (XLY) 6.33 percent and SPDR Communication Services (XLC) 6.77 percent. Rising interest rates boosted financials with the 10-year yield closing at a new post-pandemic high. Strong earnings lifted consumer discretionary and communication services.
Investors mostly shrugged off a rebound in the dollar this week. The U.S. Dollar Index gained 0.45 percent, but iShares MSCI Emerging Markets (EEM) climbed 5.54 percent. The developed market iShares MSCI EAFE (EFA) did lag U.S. markets though, it managed only a 3.20 percent rise this week.
While employment has been slow to rebound in 2021, the manufacturing and service PMIs both were strong. The ISM manufacturing PMI came in at 58.7 percent, down from 60.7 percent in December, but still a very positive number. The services PMI was also 58.7 percent, up from 57.2 percent and ahead of the consensus that was looking for a drop amid coronavirus lockdowns.
Motor vehicle sales hit an annualized pace of 16.6 million in January, up from 16.3 million in December.
Earnings seasons continued its positive streak with Amazon (AMZN) crushing forecasts. Sales hit $125.56 billion; the first time Amazon crossed the $100 billion level. Earnings were $14.09 per share, nearly double the $7.23 consensus forecast. Along with Tesla, Amazon powered the consumer discretionary sector this week.
Alphabet (GOOGL) lifted the communication services sector after its shares spiked post-earnings. Google gained 14.37 percent on the week.
This week’s earnings beats have swung S&P 500 blended earnings growth to positive 1.7 percent, up 11 percentage points from where analysts forecast coming into 2021.