Key Takeaways
- Amazon Misses Earnings, Plans Record AI Spending, Shares Drop Premarket.
- Jobs Report Misses Forecasts, Fed Likely To Hold Rates Steady.
- Investors Await Nvidia Earnings As AI Spending Continues Rising.
Markets were mixed on Thursday and little changed. The S&P 500 gained 0.4% and the Nasdaq Composite moved higher by 0.5%. Both the Russell 2000 and Dow Jones Industrial Average closed lower by 0.3%. Volume levels have been weak all week as investors waited on this morning’s jobs number.
According to Bloomberg, analysts were forecasting 160 thousand new jobs and an unemployment rate of 4.1%. The actual numbers came in at 143,000 new jobs and an unemployment rate of 4%. According to the CME FedWatch Tool, heading into today’s report, there was an 85.5% probability of the Federal Reserve leaving interest rates alone when they meet in March. That number was unchanged following the report.
After the close on Thursday, Amazon announced their fourth-quarter earnings, which disappointed. The company missed on cloud revenues then forecast lower than expected sales and operating
income. Then, it what has been a theme of this earnings cycle, Amazon said they would increase spending on artificial intelligence to record levels. Shares of Amazon are lower by 3% in premarket.
The repeated mention of AI spending has rattled investors, and I think that is largely because, as I have often said, we are still waiting to see what the returns on these investments will yield. I don’t think anyone believes there won’t be a significant return at some point; however, sooner or later, figures are needed so analysts can quantify how this will ultimately play out. One last thing I’ll point out, with all these companies planning to spend more on AI, I’m very interested in hearing from Nvidia when it reports later this month. There definitely appears to be significant demand. Shares of Nvidia are down 4% for the year.
One other stock making news this morning is Nike. The shoemaker has seen its stock fall around 30% from last year’s high-water mark of over $107. The company recently hosted an investor meeting which failed to inspire analyst opinions. This is a company that once dominated the shoe market but has lost its mojo of late. It will be interesting to see if the company can right the ship and turn around its fortunes. In premarket trading, shares of Nike are down 0.4%.
For Friday, I think the job number is going to take some digesting. The weaker than forecast number was accompanied by a revision to both December and November that resulted in an increase of 100,000 new jobs in the two-month period. I also think the employment numbers moving forward will be interesting in light of efforts on the part of the Trump Administration to substantially reduce the size of the government. Many of those people, if they opt to leave, may simply retire. But it remains to be seen how that will ultimately play out. I’m also watching shares of Meta Platforms which have been up for fourteen consecutive days. That’s a statistically unlikely phenomenon and I’m interested to see if we see some profit taking ahead of the weekend. As always, I would stick with your investing plan and long-term objectives.
tastytrade, Inc. commentary for educational purposes only. This content is not, nor is intended to be, trading or investment advice or a recommendation that any investment product or strategy is suitable for any person.
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