The stock market witnessed a significant rally with major market averages trading higher. Notably, the Nasdaq Composite experienced a substantial rise, buoyed by robust earnings and optimistic guidance from tech giants such as Meta Platforms (META, Financial) and Amazon (AMZN, Financial). The latter's stock surged following its quarterly report, which exceeded expectations and provided a positive outlook for the upcoming quarter. This performance has propelled Amazon to surpass Alphabet (GOOG, GOOGL) in market capitalization for the first time since 2021. Meanwhile, the Dow Jones Industrial Average saw a more modest increase, partly due to Apple's (AAPL) lackluster performance in China. The broader market was also supported by a surprisingly strong non-farm payrolls report, indicating a resilient U.S. economy.
In corporate news, Morgan Stanley (MS, Financial) announced that Mike Wilson would step down from his role as chair of the bank's Global Investment Committee to concentrate on serving key institutional clients. Lisa Shalett will assume day-to-day duties as chair of the committee, with Ellen Zentner and other managing directors joining the GIC. This move comes as Morgan Stanley continues to navigate the financial landscape, with its Q4 2023 earnings call and other reports indicating a cautious approach to the market.
The U.S. labor market delivered a robust performance, with nonfarm payrolls in January far surpassing expectations. The Department of Labor also revised December's job gains upward, while average hourly earnings saw a significant increase, suggesting a stronger-than-anticipated economy. This data led to a spike in the 10-year Treasury yield and prompted discussions about the potential for higher neutral interest rates, as suggested by former Treasury Secretary Lawrence Summers.
In the tech sector, Palantir Technologies (PLTR, Financial) is preparing to release its fourth-quarter earnings, with analysts anticipating growth in both revenue and earnings per share. The focus will be on the company's commercial division, which is expected to drive overall revenue growth. However, there are concerns that Palantir's growth may lag behind competitors such as Snowflake (SNOW) and Databricks due to challenges in its government and international commercial segments.
Meta Platforms (META, Financial) delighted investors with a strong fourth-quarter revenue beat and the announcement of its first-ever dividend, alongside a significant increase in share repurchase plans. This news sent the stock soaring, reflecting the company's robust cash reserves and the potential for AI development to drive future growth. The positive sentiment around Meta also raises prospects for companies like Nvidia (NVDA, Financial), which could benefit from increased AI-related spending.
Amazon's (AMZN, Financial) Executive Chairman Jeff Bezos has set up a plan to sell up to 50 million shares, which could be worth billions at current market prices. This move is part of a broader strategy that includes the company's annual report and compliance with SEC rules. Bezos's potential share sale comes as Amazon continues to solidify its position as a leading e-commerce and technology company.
Charter Communications (CHTR, Financial) faced a challenging day as it reported a decline in broadband subscribers and missed profit expectations. Despite a slight increase in revenue, the company's net income and margin fell, with the loss of Internet and video customers contributing to the disappointing results. AbbVie (ABBV, Financial), on the other hand, saw a surprising revenue beat in Q4, with its Botox-led aesthetics franchise performing well and potentially benefiting from the rising demand for obesity drugs.
In the energy sector, short interest in S&P 500 energy stocks (XOM, CVX, COP) remained relatively stable, reflecting a cautious stance from investors. The sector's performance has been mixed, with some companies facing increased short positions while others saw a decrease. The communication services sector (META, GOOG) also experienced marginal changes in short interest, with certain industries like Wireless Telecommunication Services and Entertainment seeing slight increases.
Finally, MP Materials (MP) and Lynas Rare Earths (LYSCF, LYSDY) are reportedly considering a deal that would unite the two largest non-China producers of rare earth materials. This potential merger comes as both companies navigate a challenging market environment influenced by China's dominance and policy moves.
