Stocks Rally On February 1, 2024 Ahead Of The January Jobs Report

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2/1/24

#Stocks – $AAPL, $AMZN, $META

#Macro – $SPX,

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Stocks rebounded today ahead of tomorrow’s job report, with expectations for 185,000 new jobs to have been created, down from 216,000 last month. Meanwhile, the unemployment rate is expected to tick higher to around 3.8% from 3.7% last month, while wage growth is expected to drop to 0.3% in January from 0.4% in December and stay steady at 4.1% y/y. Remember, last year, we got that shock January job report that was much better than expected.

We saw the S&P 500 rebound some today and managed to stall at 4900; it was the spot where the index opened yesterday. Given the results from Meta and its big move higher, it seems we could fill that gap tomorrow, as long as the jobs report comes in ok and has no surprises.

I remained focused on the Implied Volatility levels for the Mag7 names and the S&P 500 and see how this plays out. I’m not sure how the movement in Meta will play into this because the shares are up a lot after it announced a dividend and added on its share buyback program.

Meta released results that were much better than expected, which I would call shock-and-awe on the revenue beat and even the guidance for revenue next quarter. The new dividend was a surprise, so the stock is up 14% after hours. Some of this may have been done to overshadow the higher capex and higher-than-expected expenses. The company sees a capex of $30 to $37 billion in 2024 versus estimates of $33.4 billion. The company also sees total expenses at $94 to $99 billion versus estimates of $96.4 billion. The move up seems like a lot to me, so it will be interesting to see if all the gains hold.

Amazon is trading up 7.5% after hours, which also seems like a lot, considering AWS missed revenue estimates, coming in at $24.204 billion versus estimates of $24.221 billion, which is fractionally, but considering the size of the beat by Azure, the AWS numbers do not seem to compare as well. The company also guided first-quarter revenue of $138 to $143.5 billion versus estimates of $142 billion. It is just surprising I guess to have seen Microsoft go down after it report, and to see these Amazon AWS numbers for Amazon to go up. I get that operating income was better, but still. I own both Microsoft and Amazon.

Of course, Apple reported good numbers on the top and bottom but had horrible numbers out of China, which was a big concern of mine. The company reported China revenue of $20.8 billion versus estimates of $23.5 billion and an 11.4% miss. Services revenue for Apple also missed coming in at $23.1 billion versus estimates of $23.3. billion. Apple does give numbers for guidance, but said it expected revenue to be flat to last year for the fiscal second quarter, versus expectation for 1% growth. The stock is down about 3.5% after hours.

So overall, it was just a strange day, and I could imagine tomorrow getting stranger with the job report still out there.

-Mike

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