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US Stocks Mixed on Friday as Jobs Data Could Cement Fedās Thinking
• US stocks were mixed Friday. A better-than-expected jobs report was met with bittersweet sentiment from the Street. On the one hand, it's great to see job growth despite surging Omicron cases. At the same time, analysts note that too much of a good thing could lead to an overheated economy. Wall Street largely believes the Federal Reserve will continue with its plan to raise interest rates as soon as next month. To that end, the US 10-year Treasury yield topped 1.9% on Friday, its highest level since December 2019. This in turn dented appetite for equities.
• Zooming out, markets have been highly volatile recently, and some analysts predict this will continue. There are a number of reasons for this turbulence, and the prospect of rising interest rates is one of them. Geopolitical instability and questions about future COVID-19 variants are also causing uncertainty. There have been a number of noteworthy earnings reports lately as well ā some good, some bad ā that impact the collective mindset of investors. For example, Alphabet posted an upbeat report last week and announced a stock-split, leading to a surge in its stock price. Meanwhile, Meta Platforms announced that Facebookās user base has stopped growing, leading to a major selloff of its stock.
• During times of volatility and uncertainty, it's important to stay calm and stay invested. Short-term ups and downs should not impact long-term investment goals. Seeing the forest through the trees, or zooming out, is essential because even if there are losses now, they might be offset by gains during upswings. Reassessing emergency funds can be a wise decision during market swings. It's never a bad idea to do a monthly or even weekly financial health checkup, just like visiting the doctor. At the end of the day, map out a plan and stick to it whether times are awful or amazing. Read more about investing through volatile periods here.
What to Be on the Lookout for Today
• The Federal Reserve reports Decemberās consumer credit figure. This totals all loans Americans took on to purchase goods or services including credit card debt. The November figure increased by $40 billion, more than double expectations. Analysts say this shows US households are using debt more freely now that COVID-19 stimulus funds are largely spent.
• On the earnings front, toymaker Hasbro (HAS) reports its quarterly results. Its most recent earnings beat analyst expectations, with company management saying supply-chain issues held back sales. Late last month, news broke that rival Mattel had won back the rights to Disney princess toys from Hasbro.
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A Few Headlines That Should Be on Your Radar
During the week ahead on Wall Street, investors will be closely watching inflation data, with a number of key indicators set to be released. With the CPI and Core CPI due on Thursday, the market will be provided with insight as to how pricing increases could affect the Fedās thinking. If inflation continues to rise, the central bankās hawkish policy will be justified, and that could lead to a broader drain on equities. Read more >> Sony and Nintendo are facing ongoing supply-chain challenges, but both companies are succeeding with game sales ā especially online. Analysts point out the electronics companies are having difficulty delivering gaming consoles as hardware must be constructed and shipped, leaving the division subject to logistics issues and component shortages. Online game sales donāt rely on either of those components and they have remained steady. Read more >> Dynamic pricing is no longer just for airlines and gas stations as retailers test out the strategy. Retailers facing rapidly rising wholesale costs are trying out so-called dynamic pricing in which the prices of items may change inside of a single day. Changing prices monthly or weekly can leave retailers looking at negative profit margins. Some worry the practice risks losing customer loyalty. Read more >> Staying connected with friends, family, loved ones, and even coworkers can be difficult during times of social distancing. However, there are now more options than ever to stay connected virtually without breaking the bank. Our monthly roundup of articles from around the web includes advice for newlyweds, how to nurture romantic relationships, tips for keeping in touch with family and friends, and how to build coworker relationships in a remote workplace. Read more >>Not-So-Breaking News
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Amazon (AMZN) posted mixed earnings last week as the ecommerce giant easily beat analyst expectations on earnings per share but missed on revenue. Analysts say this reflects the slowdown in online shopping, while the company's cloud computing and advertising divisions are on the rise and pandemic-related costs are seemingly being kept in check.
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Cruise operator Royal Caribbean (RCL) fell short of analyst expectations for revenue and posted a larger fourth-quarter loss than anticipated. The company faced service disruptions and broad cancellations as the Omicron variant of COVID-19 surged.
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Snap (SNAP) is crediting quicker-than-expected progress working through Apple's (AAPL) iOS changes as the social media platform reported its first-ever quarterly profit. The changes impact advertisersā ability to target specific users, something Meta Platforms (FB), for example, says will cut annual revenue by upwards of $10 billion.
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Fellow social media company Pinterest (PINS) reported its first-ever annual profit and quarterly earnings exceeding analyst expectations. The company says although daily active users fell 6% from last year's peak, advertising through video helped revenue soar by 20%.
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News Corp (NWSA) reported it was the target of a persistent cyberattack that attempted to access the personal data of both employees and customers. The company's own Wall Street Journal reports the attack likely intended to gather intelligence that might benefit China.
Financial Planner Tip of the Day
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