Stock Market Surges on Interest Rate Hike, Jobs Report, and Key Earnings
WHAT YOU SHOULD KNOW
- The Federal Reserve increased the fed funds interest rate target by 0.25% to a range of 4.5% to 4.75%.
- The U.S. economy added 517,000 jobs in January, resulting in a 50-year low unemployment rate of 3.4% and a wage growth rate of 4.4%.
- Companies such as Facebook’s parent company, Meta Platforms, and Peloton saw impressive growth, leading to a boost in the tech-focused Nasdaq Composite.
The stock market saw a major surge this week as investors processed the latest interest rate hike from the Federal Reserve and the impressive January jobs report. On Wednesday, the Fed increased the fed funds interest rate target by 0.25% to a range of 4.5% to 4.75%. This hike follows the 0.5% rate hike in December , and economists predict that the central bank will make at least one more rate hike in March to control inflation.
The US economy added 517,000 jobs in January, far surpassing the expectations of 187,000 new jobs. This led to a 50-year low unemployment rate of 3.4% and a wage growth rate of 4.4%. The tech-focused Nasdaq Composite saw a 3.2% increase on Thursday, boosted by the better-than-expected fourth-quarter results from Facebook’s parent company, Meta Platforms. Meta shares saw a 23% jump, marking its best single-day performance since 2013.
On Monday, the International Monetary Fund raised its global economic growth forecast for 2023 from 2.7% to 2.9%. The growth is expected to improve to 3.1% in 2024 but will still remain weak compared to historical standards. Peloton shares also saw a rise of 26% on Wednesday, following the connected fitness equipment maker’s impressive subscription revenue growth and improved margins in the fiscal second quarter.
Investors will receive more quarterly reports from companies such as BP, Walt Disney, Uber Technologies, and PayPal Holdings in the upcoming week. According to FactSet, only four of 11 S&P 500 market sectors reported positive earnings growth in the fourth quarter.
Wall Street will receive additional key economic updates on Tuesday with Fed Chair Jerome Powell’s appearance at the Economic Club of Washington, D.C., and on Friday with the release of the University of Michigan’s preliminary U.S. Consumer Sentiment Index for February.
With more economic updates and earnings reports on the horizon, it will be interesting to see what’s next for the market.
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