Weekly Market Commentary: Stocks Extend Rally; Eyes on Tech

Kyle Hogan • February 7, 2022

The Week on Wall Street

Stocks managed to gain ground last week as investors turned their focus to corporate earnings.

The Dow Jones Industrial Average rose 1.05%, while the Standard & Poor’s 500 gained 1.55%. The Nasdaq Composite index picked up 2.38% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, tacked on 2.73%. ^1,2,3

Earnings In Focus

At the start of the week, stocks extended the previous week’s rally with some high-growth companies leading the move higher. Strong company profits fueled the market the middle of the week, until an earnings disappointment from a mega-cap company took investors by surprise. The earnings miss deflated sentiment as it heightened worries of what it may portend for other technology companies yet to report. These anxieties led to a sell-off that reverberated across the market.

Subsequent earnings beats from several technology and social media names, and an above-consensus rise in new payrolls on Friday, helped the market close with week with a solid gain.

Omicron and Unemployment

A string of employment reports pointed to a generally healthy labor market, despite the Omicron surge late last year. The Job Openings and Turnover Survey (JOLTS) showed a hiring slowdown, with near-record high job openings and worker resignations. The ADP (Automated Data Processing) employment report saw private payrolls shrink by 301,000. That was the first monthly decline since December 2020. ^4, ⁵

More encouragingly, initial jobless claims declined, while continuing jobless claims reached their lowest level since 1973. A strong January employment report showed 467,000 jobs added during the month, with upward revisions to previously released November and December. ^6,7

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This Week: Key Economic Data

Tuesday: Consumer Price Index (CPI). Jobless Claims.
Friday: Consumer Sentiment

_{Source: Econoday, February 4, 2022 – The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.}

This Week: Companies Reporting Earnings

Monday: Amgen, Inc. (AMGN).
Tuesday: Pfizer, Inc.(PFE), Chipotle Mexican Grill, Inc. (CMG), Sysco Corporation (SYY).
Wednesday: CVS Health Corporation (CVS), The Walt Disney Company (DIS), Twilio, Inc. (TWLO), Yum Brands, Inc. (YUM), O’Reilly Automotive, Inc. (ORLY).
Thursday: Twitter, Inc. (TWTR), The CocaCola Company (KO), Illumina, Inc. (ILMN), Duke Energy Corporation (DUK), PepsiCo, Inc. (PEP), Kellogg Company (K), Expedia Group, Inc. (EXPE).
Friday: Dominion Energy, Inc. (D).

_{Source: Zacks, February 4, 2022 – Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.}