Mid-Week Market Minute 1.31.24

Busy Earnings Week; Federal Reserve Meeting Ends Today

Global stocks were mostly higher in the early stages of this busy week of earnings. As of Wednesday morning, the S&P 500 was on pace to notch its third consecutive month of positive returns, while international stocks looked to finish January mostly unchanged. In bonds, interest rates trended lower this week ahead of Federal Reserve announcement, with the yield on the 2-year and 10-year Treasury notes trading around 4.31% and 4.02%, respectively, mid-week.

Market heavyweights Microsoft (MSFT) and Alphabet (GOOG) reported fourth-quarter earnings results on Tuesday, beating both top- and bottom-line expectations. Still, shares of these stocks saw downward pressure following the reports as investors looked to take profits in these stocks that saw their shares rally nearly 60% in 2023. Elsewhere, investors will keep a close eye on earnings results from Apple, Facebook, and Amazon later this week. With valuations for these market behemoths hovering well-above average, we could continue to see a relatively muted upside response from these names in the near-term, even if earnings remain strong.

Shifting to the Federal Reserve, markets are anxiously waiting to hear what Fed Chair Jerome Powell has to say following the central bank’s policy announcement on Wednesday afternoon. Markets aren’t expecting any change in policy rates at this meeting but instead will look for guidance into the future path of monetary policy. Most of what we’ve heard from Fed officials so far this year points toward a reluctancy to cut rates sooner than needed. Still, the markets continue to expect as many as five rate cuts this year with the first coming as early as March.

On the data front, private payroll growth slowed to 107,000 in January, according to the ADP report this week. This report comes two days ahead of the widely followed nonfarm payrolls report due Friday, which is expected to show job growth of 185,000, lower than December’s 216,000 increase. While the ADP data can provide a barometer for private sector hiring, the two reports often differ with ADP often undershooting the Labor Department’s numbers. 

Source: GSAM, CNBC, JPMorgan

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