Big Tech Earnings, Job Openings Rise – US Market Wrap

A $246 billion exchange-traded fund tracking the Nasdaq 100 (QQQ) fell in late trading after Microsoft and Alphabet reported results that sank two of the tech behemoths that have fueled the stock market rally.

Alphabet’s fourth-quarter revenue from its core search advertising business fell short of analysts’ expectations, overshadowing an otherwise strong end to the year. Microsoft’s cloud growth disappointed some Wall Street analysts, despite the company posting its strongest revenue growth since 2022, driven by interest in new artificial intelligence products.

Equities struggled to find a footing in regular trading, as traders sifted through a slew of economic data and awaited the Federal Reserve’s rate decision. Wall Street had to digest a higher-than-expected reading on job openings, leaving investors guessing what Jerome Powell would say Wednesday as the market trimmed bets on a March Fed cut.

The S&P 500 remained relatively unchanged, while the Nasdaq 100 underperformed, with Apple leading losses in megacaps. Traders also waded through the results of an economic barometer, United Parcel Service, which fell on a disappointing forecast. The courier intends to cut 12,000 jobs. Financial stocks rose following a bullish analyst call on major US banks. Treasury two-year yields increased four basis points to 4.36%. The 10-year yield fell two basis points to 4.05%.

Swap contracts referencing the March Fed meeting, which is the next one after this week’s, are now down about a third of a point. Late last year, a quarter-point cut in March was fully priced in, reflecting failed expectations for labor-market cooling.

In December, US job openings unexpectedly rose to their highest level in three months, while fewer Americans quit their jobs. Tuesday’s data marks the beginning of a series of releases that will provide insight into the state of the labour market. A report due Wednesday is expected to point to lower employment costs by the end of 2023, while the government’s jobs report on Friday is expected to show that US employers added approximately 185,000 jobs in January.

Separate data showed that US consumer confidence rose in January to its highest level since the end of 2021, as Americans became more optimistic about the economy and the job market while having more sanguine views about inflation.