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Kevin Matras   
Profit from the Pros
By Kevin Matras
Executive Vice President
Zacks Investment Research

Stocks Closed Higher Ahead Of This Morning's Employment Report

Stocks closed higher again yesterday on follow through buying after Wednesday?s Fed decision on rates.

The Fed's less hawkish stance on how high rates might go in the wake of easing inflation was cheered by the market.

The Fed is expected to raise rates another 25 basis points at their next meeting in March. But what they do at the meeting after that (in May), remains to be seen. The Fed hinted that they still see rates getting to 5.10% by year's end (which would mean two more 25 bps rate hikes). But the Fed did say that "if we do see inflation coming down much more quickly, that will play into our policy setting." Fed Funds traders are betting on the latter as they expect the Fed to call it quits after just one more hike.

We got a slew of earnings after the close. Apple reported a negative EPS surprise of -2.59%, and a negative sales surprise of -3.34%. Sales for the quarter were down about -5% vs. the same quarter last year. It was their first y/y decline since 2019. And their largest quarterly revenue decline since 2016. They were up 3.71% in the regular session. But down -0.54% in after-hours trade.

Amazon reported after the close as well, and they posted a positive EPS surprise of 40%, and a positive sales surprise of 2.64%. They were up 7.38% in the regular session, and down -1.17% after-hours.

Alphabet (Google) posted a negative EPS surprise of -7.89%, and a negative sales surprise of -0.04%, which was weighed down by a -3.6% decline in ad revenue vs. the same quarter last year. It was their first drop in ad rev since the pandemic, and only the second decline since they went public in 2004. They were up 7.27% in the regular session, but down -3.68% after-hours.

And Ford Motor reported a negative EPS surprise of -15%, but a positive sales surprise of 6.25%. They were up 3.84% in the regular session, but down -6.35% in after-hours trade.

There were plenty of positive surprises too: before the open, Bristol Myers reported a positive EPS surprise of 6.43%; Eli Lilly posted a positive EPS surprise of 14.21%; and Cardinal Health posted a positive EPS surprise of 16.81%.

There's another 62 companies on deck ready to report today.

The main event today, however, will be the Employment Situation report by the Bureau of Labor Statistics (BLS). The consensus is calling for 185,000 new jobs (170K in the private sector and 15K in the public), while the unemployment rate is expected to tick up from 3.5% to 3.6%. Average hourly earnings are expected to have increased 0.3% m/m, which would be in line with last month's report, and 4.4% y/y, which is a tad lower than last month's print of 4.6%.

Note: Wednesday's ADP Employment report came in lower than expected at 106,000 new private sector jobs vs. views for 158,000. But the ADP report does have a spotty track record of predicting what the BLS report will say.

The Employment report comes out this morning at 8:30 AM ET.

In addition, we'll also get the PMI Composite report, and the ISM Services Index later in the morning.

Stocks are poised for another up week.

That will make it the 2nd week in a row for the S&P (and 4 out of the last 5 weeks), and 5 weeks in a row for the Nasdaq (and 5 out of 5 for them).

What a difference a new year makes.


Kevin Matras

Executive Vice President, Zacks Investment Research


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