Top Story
Why are companies announcing layoffs if the economy is so strong?
Thousands of job cuts from household names like UPS, eBay, and Microsoft might suggest a downturn. But labor market stats tell a different story.
US stocks traded sharply lower Wednesday as the outlook for a Fed policy rate cut in March looks increasingly tenuous
• The Fed left rates unchanged for the fourth time in a row, emphasizing that it is not yet ready to start cutting rates. Chairman Powell added that it’s unlikely to reach the required level of confidence to cut rates in March.
• Both Microsoft and Google beat earnings expectations but their shares fell: Microsoft stock closed down 2.7% after issuing revenue guidance below expectations, while Google stock dropped 7.5% due to lower-than-expected ad revenue. Also in tech, shares of chipmaker AMD dropped 2.5% after its first-quarter forecast fell short of estimates.
• Shares of Ozempic-maker Novo Nordisk jumped 5.3% after reporting better-than-expected results and forecasting strong sales growth in 2024.
• Boeing didn’t provide guidance due to the ongoing fallout related to some of its Max jets and the Alaska Airlines midair incident. However, the company beat estimates and its stock rose 5.3%.
• Shares of Paramount jumped 6.7% on news media mogul Byron Allen submitted a $14.3 billion offer to buy all of the company’s outstanding shares and assume Paramount’s roughly $15 billion debt load.
• In economic data, private sector employment grew less than expected in January, according to the ADP employment report , and the 30-year mortgage rate was unchanged at 6.78%
What to be on the lookout for today
• The weekly update to unemployment claims is due out, as well as an update to the manufacturing sector with the ISM’s Purchasing Managers' Index for January.
• In company earnings, Amazon, Honeywell, Merck, Meta, Peloton, Royal Caribbean, and U.S. Steel will report.
Rate cuts? Yes! But when, is the question…
The first Fed meeting of the year came and went, and the market didn’t seem to like it. The central bank left policy rates unchanged — as expected — but had some clear words on future rate cuts: We’re just not there yet.
Rather, the FOMC wants to see more proof of inflation coming down as it’s trying to get the timing right to lower rates without hampering the economy, or reigniting inflation. Read on as SoFi Head of Investment Strategy Liz Young breaks down the January Fed statement.
Also, don’t forget to check out the most recent episode of The Important Part podcast. Liz sat down with Cameron Dawson, CFA to talk about her outlook for 2024.
Today’s top stories
What can companies do to help close the racial wealth gap? The good news first: Wealth among Black Americans is rising. But the racial wealth gap is still growing, and the numbers are striking: In 2022, for every $100 in wealth held by White households, Black households held only $15. Closing it won’t be easy, but employers can offer workers tools and benefits to address this disparity. Read more >> Higher gas prices could be coming to the Midwest Canada, the world’s fourth largest oil producer, will soon have an easier way to get oil to the gulf. But parts of America might pay the price. Read more >> The anatomy of a stock market bubble Everyone wants to be able to spot the next stock market bubble, but it’s hard to do. Here’s a deep dive into what causes stock market bubbles and how they develop. Read more >>Other news that caught our eye
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The Department of Education said it will take longer to inform prospective college students of their financial aid status due to a data delay caused by an overhaul intended to simplify the FAFSA.
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Walmart plans to add 150 more stores across the U.S. over the next five years amid a growing need for larger retail spaces.
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Universal Music Group will pull its songs from TikTok instead of renewing its licensing contract. Hundreds of major artists are signed to the label, including Taylor Swift, Drake, and BTS.
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California’s Disneyland plans to spend up to $2.5 billion to add new attractions, hotels, and shops, expanding its 100-acre resort into surrounding city streets.
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A Delaware state court threw out Tesla’s $51 billion compensation package for Elon Musk, ruling that Musk and the Tesla board failed to prove the plan was fair.
Financial planner tip of the day
"Deciding how to invest money in your 20s can seem overwhelming at first; there are a lot of people with differing opinions and it’s hard to know where to start. But remember that you don’t need to be bringing in the big bucks to be a savvy investor."
Brian Walsh, CFP® at SoFi