Market Recap: Week of JAN. 29 - FEB. 2, 2024

Gordon Achtermann |
Market Recap

The S&P 500 index rose 1.4% this week to a fresh closing high, boosted by better-than-expected monthly jobs data and quarterly corporate earnings.

The market benchmark ended Friday's session at 4,958.61, the highest closing level ever and its fourth consecutive week of gains. The last prior record close had been reached on Monday at 4,927.93. The index also reached a new intraday high on Friday at 4,963.99, surpassing its prior intraday record reached on Tuesday at 4,931.09.

On Wednesday, the S&P 500 closed out January with a 1.6% increase for the month, its third consecutive month of gains. It is now up nearly 4% for 2024 to date.

The gains this week came as a number of large companies including Apple (AAPL), Mastercard (MA), (AMZN) and Meta Platforms (META) posted quarterly financial results above analysts' expectations. In the last week, some 68% of the S&P 500's components that reported quarterly results posted earnings above analysts' expectations, with the week's overall S&P 500 earnings coming in about 7.7% above expectations, according to Bloomberg data.

Labor Department data on Friday showed stronger-than-expected job growth last month as hourly wages continued to accelerate. Nonfarm payrolls rose by 353,000 in January, well above the consensus estimate for a 185,000 gain, according to a survey compiled by Bloomberg. The unemployment rate remained unchanged at 3.7% on a monthly basis; a 3.8% rate had been expected.

PCE: According to the most recent Core Personal Consumption Expenditures (PCE) release, the rate of price increases slowed down as 2023 came to a close. 

PCE is the Fed's preferred inflation indicator. It showed that prices were higher by 0.2% month-over-month in December and by 2.9% year-over-year. Dow Jones economists had expected respective increases of 0.2% and 3%. 

However, digging a little deeper and looking at the three and six-month averages of Core PCE on an annualized basis, we see core PCE running under 2% (the Fed’s Target is 2%). So inflation is still, and has been for a while, mostly dead.

The consumer sectors had the largest percentage increases of the week, with consumer discretionary climbing 3.8% and consumer staples up 2.1%. Health care climbed 2.0%, industrials added 1.9% and communication services rose 1.6%. Other gainers included financials, technology, materials and utilities.

The gainers in consumer discretionary included General Motors (GM), which reported stronger-than-expected Q4 results despite impacts from the United Auto Workers strike and forecast 2024 earnings above views. Shares rose 11% on the week.

Shares of fellow auto maker Ford Motor (F) were also strong this week, climbing 6.6%, as the company reported higher US vehicle sales for January on an annual basis despite lower electric vehicle sales. Ford plans to release its Q4 results after the market close next Tuesday, Feb. 6.

In consumer staples, shares of Sysco (SYY) rose 8.4% as the provider of food products for the foodservice and hospitality industries reported fiscal Q2 adjusted earnings per share above analysts' expectations and reiterated its guidance for fiscal 2024.

Just two sectors ended the week in the red: Real estate shed 0.5% and energy declined 1.0%. The drop in energy came as crude oil futures fell.

The real estate sector's decliners included shares of Boston Properties (BXP), which fell 11% on the week. The real estate investment trust reported Q4 funds from operations and revenue came in slightly above analysts' mean estimates but much of its guidance range for 2024 funds from operations fell below the Street's then view.

Next week's earnings calendar features McDonald's (MCD), Caterpillar (CAT), Eli Lilly (LLY), Amgen (AMGN), Walt Disney (DIS), Uber Technologies (UBER), CVS Health (CVS), Philip Morris International (PM), ConocoPhillips (COP) and PepsiCo (PEP).

Economic reports will be on the lighter side, with data including January readings from S&P as well as the Institute for Supply Management on the services sector, the December trade deficit, January consumer credit, and December wholesale inventories.

All the Best!

Gordon Achtermann, CFP®