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MONDAY: After the prior week’s declines, U.S. stocks rebounded on Monday thanks to robust U.S. manufacturing activity and a strong performance from a few high profile technology companies. According to the Institute for Supply Management, after contracting for five straight months, U.S. factory activity unexpectedly rebounded in January. The data release helped stocks recover and they were further aided by names like Microsoft, Tesla and Google parent, Alphabet. All three technology companies saw their shares rise yesterday with Tesla specifically rallying for its fifth straight day. After Panasonic reported the first quarterly profit in its U.S. battery business with the electric vehicle maker, Tesla’s stock surged past $700. That being said, oil prices dropped and Chinese stocks tumbled as investors try to calculate the potential economic impact of the coronavirus. The outbreak has now infected more than 17,000 people and has been linked to more than 360 deaths. Lastly, Wall Street also had its eye on Monday’s presidential caucuses in Iowa in order to see which candidate may be best positioned to win the nomination for the Democratic party. On the whole, all three major U.S. indexes, as well as the small-cap Russell 2000 Index, closed the day higher from where they started.
TUESDAY: US stocks marched higher on Tuesday thanks in part to robust global manufacturing data and moves from the Chinese central bank to insert liquidity into the country’s banking system this week. In the US, the Institute for Supply Management’s manufacturing index rose to 50.9 in January from 47.2 in December. A reading of more than 50 indicates expansion in the manufacturing sector of the economy and marks a return to growth for the first time since July. Meanwhile, China has injected $242.74 billion into its financial system over the past two days, helping local stocks recover some losses and lifting the world equity index. Adding to the optimism was the fact that nearly 70% of companies that have reported earnings so far have beat analyst expectations. The fourth-quarter earnings season is roughly half done, and although there have been some positive results, there have been some disappointments as well. For example, shares of Google parent company, Alphabet dropped on Tuesday after it’s advertising business and new data about Google Cloud and YouTube disappointed investors. Although the coronavirus has introduced volatility into the markets, and investors are still trying to fully grapple with the global economic consequences, all three major U.S. indexes ended the day in positive territory.
WEDNESDAY: After a string of positive data points, U.S. stocks rose for a third straight day on Wednesday. To start, the ADP National Employment Report showed that private-sector payrolls increased by 291,000 in January, far above expectations of 156,000 job additions. Secondly, figures released by the Institute for Supply Management highlighted an uptick in service sector activity. Both of these data points follow a robust manufacturing report from earlier this week. The takeaway is that Wall Street has recovered from last week’s losses which were driven by worries over the coronavirus. In company news, Coty shares jumped after the cosmetics maker reported better than expected quarterly profit and revenue. Tesla, on the other hand, saw its shares sink after six days of gains partly driven by reports the coronavirus could impact production at its plant in China. Ford’s stock also hit the breaks after the automaker gave a lackluster outlook for the rest of 2020. On the whole, all three major US indexes ended the day up from where they started.
THURSDAY: After China announced on Thursday that it will cut additional tariffs in half on $75 billion worth of US imports, stocks gained for a fourth straight day. The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite indexes all hit record highs as investors appear to be putting concerns over the coronavirus on the backburner. It is notable, however, that more than 28,000 infections have been confirmed inside China with over 500 deaths. The outbreak has halted cruise ships and airplanes, and has put a massive strain on the global medical-mask market. In the U.S., however, the focus has been on multiple upbeat economic reports. The number of Americans filing for unemployment benefits dropped to a nine-month low last week. The Labor Department also said that productivity growth accelerated at the end of last year. Dallas Fed President Robert Kaplan told an audience in Austin that he expects “solid” economic growth through the rest of 2020 and the latest corporate earnings have largely beaten analysts’ expectations. With that said, all eyes will be on the monthly U.S. employment report, which is released this morning.
FRIDAY: Stocks lost ground on Friday but still ended the week in positive territory thanks to strong economic data and receding fears over the coronavirus. U.S. job growth specifically surprised on the upside. The Bureau of Labor Statistics announced that the economy added a whopping 225,000 jobs in January. For comparison, consensus expectations compiled by Bloomberg projected only 165,000 new additions. The education, health care, and construction industries all had strong performances. Meanwhile, the manufacturing sector registered job losses thanks to trade tensions, a strong dollar, an autumn strike at General Motors, and Boeing’s 737 MAX crisis. The labor department also announced that the unemployment rate inched slightly higher to 3.6% from a 50-year low of 3.5%. The uptick was actually viewed in a positive light as it meant the labor force participation rate increased. This week we’ll be entering the final stages of the fourth-quarter earnings season. More than 300 S&P 500 companies have handed in their report cards so far. Of those, 70% have beaten Wall Street expectations. On the whole, last week was a nice bounce back from the week before with all three major indexes recording sizable gains.