By Yasin Ebrahim
Investing.com – The S&P 500 notched a two-week win streak Friday as Amazon's swashbuckling gains led tech out of the clutches of despair after a surprisingly strong jobs report sent U.S. Treasury yields to multi-year highs.
The S&P 500 rose 0.5%, the Dow Jones Industrial Average fell 0.06%, or 21 points, the Nasdaq rallied 1.3%.
The U.S. economy created 467,000 jobs last month, well above the expectations for 150,000, led by job gains in the leisure and hospitality sector, which confounded expectations that an omicron-impact would weigh on the services industry.
Average hourly earnings increased by a better than expected 0.7% for the month, while the unemployment rate ticked higher to 4%.
U.S. yields surged on expectations for more aggressive Fed action, with the U.S. 10-year yield jumping above 1.9% for the first time in more than two years.
Tech climbed out of early-day trouble against the backdrop of rising rates as strong quarterly earnings from Amazon restored sentiment on growth somewhat after Meta’s plunge a day earlier.
Amazon (NASDAQ:AMZN) rallied more than 13%, notching the record for the biggest one-day market cap gain, following better-than-expected fourth-quarter earnings and fiscal first quarter guidance.
The bulk of earnings beat was led by gains from the company’s Rivian stake, but better than feared Q1 guidance and the move to hike the annual price of U.S. Prime subscriptions to offset costs also helped boost investor sentiment.
“Amazon’s profitability should expand as it grows opex more slowly than revenues. Amazon Web Services, Fulfillment by Amazon, and ads should drive steady margin expansion, with Prime memberships driving overall retail revenue growth,” Wedbush said in a note.
Other megacap stocks including Alphabet (NASDAQ:GOOGL), Meta Platforms (NASDAQ:FB), and Apple (NASDAQ:AAPL) retreated from the day's highs to end mixed. Meta Platforms lost about $250 billion in market cap after plunging 26% on Thursday.
Snap (NYSE:SNAP), meanwhile, jumped 58% following quarterly results that topped expectations,
The wild swings in markets recently, however, is expected to continue, and likely sets up rocky road for the weeks ahead until there is more certainty about the path of inflation and the Fed’s plan to tighten monetary policy.
“Volatility generally means bear markets … the fact that we've seen a spike in volatility doesn't bode well for overall markets,” Darren Schuringa, CEO of ASYMmetric ETFs said in an interview with Investing.com on Friday. Volatility is set to continue until “some of these other factors, primarily the Fed and inflation, settle down.”
Portfolio positioning would be best served by companies "that are able to pass on price increases to preserve their margins, and are growing the top lines," Schuringa added.
Inflation will come into added focus next week, when the data is expected show the pace of core consumer prices, which excludes food and energy, slowed in January.
"[B]ase effects will keep pushing y/y growth rates higher through Feb, but monthly increases could begin to decelerate as early as next week," Jefferies said in a note.