Market Perspective for February 7, 2020

The Nasdaq gained 4.06 percent this week as strong economic data and corporate earnings lifted the market. The S&P 500 Index rose 3.19 percent and the Dow Jones Industrial Average climbed 3.03 percent.

SPDR Technology (XLK) advanced 4.60 percent thanks to a bounce in semiconductor shares and large-cap components. VanEck Semiconductor (SMH) rallied 4.35 percent. Microsoft (MSFT) increased 8.10 percent. SPDR Communication Services (XLC) was also a solid performer following positive earnings from Disney (DIS). XLC climbed 3.60 percent. Facebook (FB) rose 5.18 percent.

SPDR Healthcare (XLV) returned 3.92 percent. The biotechnology sector powered the move. SPDR S&P Biotech (XBI) jumped 6.97 percent.

Economic data was solid with positive manufacturing PMIs in the U.S., Europe and China. Motor vehicle sales in January came in stronger than expected at an annualized pace of 16.8 million vehicles. December factory orders grew 1.8 percent versus the 1.5 percent forecast.

Service PMIs also came in stronger than expected. December’s ISM services PMI was 54.9 and economists predicted 55.0 for January. The final figure was 55.5 percent.

The U.S. economy created far more jobs than forecasted in January. Economists were looking for 165,000 jobs, but 225,000 net new jobs were created. The unemployment rate ticked up to 3.6 percent as discouraged workers returned to the workforce. Wage growth was 0.2 percent, double December’s figure.

Earnings were particularly strong. AbbVie (ABBV) rallied 13.91 percent on the week, Cardinal Health (CAH) 13.75 percent, Cigna (CI) 8.60 percent, New York Times (NYT) 16.90 percent, Nuance Communications (NUAN) 15.49 percent, iRobot (IRBT) 16.31 percent, Olin Corp (OLN) 9.28 percent, Markel Corp (MKL) 11.14 percent, Clorox (CLX) 5.67 percent and Disney (DIS) 1.96 percent.


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