A “Now Hiring” sign at an Advance Auto Parts store in San Leandro, California, US, on Tuesday, Aug. 15, 2023.
David Paul Morris | Bloomberg | Getty Images
This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
Stocks close up
Wall Street closed higher Friday, with the S&P 500 hitting a fresh high, boosted by earnings from mega tech firms and the stronger-than expected January jobs report. The benchmark S&P gained 1.07%, while the Dow Jones Industrial Average added 0.4%. The Nasdaq Composite gained 1.74%. This is another busy week of corporate earnings for markets, including results from McDonalds and Ford.
Powell’s cautious tone
Federal Reserve Chair Jerome Powell in a “60 Minutes” interview aired Sunday said the central bank will proceed carefully with interest rate cuts this year. “We just want some more confidence before we take that very important step of beginning to cut interest rates,” he said.
U.S. led Houthi strikes
U.S. and U.K. forces “conducted strikes against 36 Houthi targets at 13 locations” in Yemen, U.S. Central Command said over the weekend. NBC News is currently the only news organization embedded with the U.S. Navy in the Red Sea while it is conducting strikes.
Apple’s China problem
Apple is facing problems in China, a crucial market for the tech giant. More cautious consumer sentiment and stiff competition from Huawei pose a huge challenge for Apple, which saw iPhones sales plunge in China.
[Pro] Citi’s top global picks
Citi highlighted its list of “high-conviction” stock picks across global markets. “We identify catalysts that will trigger outperformance and chose liquid names in which investors can build positions,” Citi said, giving one over 50% upside.
The bottom line
U.S. jobs growth started the year firing on all cylinders.
January’s report out on Friday was a blowout. It indicated remarkable strength of the labor market, which bodes well for the broader economy.
Employers added 353,000 jobs for the month, defying economists’ forecasts. The unemployment rate held steady at 3.7%, against the estimate for 3.8%. What’s more, both November and December data were revised up.
There was more good news on the wage front, which came in strong, up 4.5% last month from a year earlier. Average hourly earnings also increased 0.6%, double the monthly estimate.
The White House seized on the solid data for a quick victory lap, unsurprisingly.
“America’s economy is the strongest in the world. Today, we saw more proof…” President Joe Biden said in a statement.
“Our economy has created 14.8 million jobs since I took office, unemployment has been under 4% for two full years now, and inflation has been at the pre-pandemic level of 2% over the last half year,” he added.
Yet, the job market’s surprising resilience throws a wrench into the Fed’s plans to lower interest rates.
Last week, Fed Chair Jerome Powell essentially ruled out a March rate cut, citing a need for more evidence that inflation was firmly under control.
A scorching jobs report will likely fuel the Fed’s thinking to further delay rate cuts for this year. This means, investors may need to readjust their expectations.