Signal of a strong recovery on the Wall, with technology stocks ‘guiding’

Clearly bullish on Wall Street on Thursday, with the tech Nasdaq, one day after entering correction levels, recording the highest gains, with investors rushing back into tech stocks.

On the dashboard, the industrial Dow Jones gains 214.01 points or 0.61%, with the widest S&P 500 strengthened by 43.94 points or 0.95%, and the technological Nasdaq records an increase of 216.53 or 1.51%.

On Wednesday, the Nasdaq closed at a loss of more than 10% from its all-time high of November 2021, entering technical correction territory.

Technology shares are leading the recovery after yesterday’s losses on the board, with Zoom Video, Microsoft, Meta Platforms and Tesla gaining from 1% to 3%. The streaming giant, Netflix, is also moving upwards, awaiting its quarterly results after the session.

Travelers, one of Dow’s 30 companies, exceeded analysts’ expectations for quarterly earnings and revenue, while American Airlines also exceeded estimates, but downgraded guidance.

United Airlines shares are down about 1%, following the announcement of results by the company and its warning that the Omicron mutation in coronavirus affects the levels of bookings and will further delay its recovery from the shock of the pandemic.

Shares are moving up despite the fact that the same is true of US government bond yields, given the market waiting for interest rates to rise on the part of the Federal Reserve.

The meeting of the Fed’s monetary policy committee is scheduled for next week, with the market considering the possibility of interest rate hikes starting from January very small. Analysts’ convergent estimates already estimate four interest rate hikes of 25 basis points each in 2022.

The two-year US government bond yields at 1.04%, while the 10-year T-Bond at 1.84%.

Ford’s share is down about 3%, after its meteoric rise in 2021, in the “backs” of hopes for dynamic growth of its electric vehicle industry, however, Jefferies analysts downgraded it slightly, noting that a rise of 130% in in one year exceeded the limits of reasonable expectations.

Data on new US unemployment benefits, which were announced earlier, also showed that Omicron is to some extent costing the economy recovery.

Of the 30 Dow shares, 20 are positive and 10 are negative. The profits are led by those of Travelers Cos., Microsoft, Visa, while those losses of Caterpillar, Dow Inc., 3M.

Macro

The number reached its highest level since October 2021 of new applications for unemployment benefits last week, according to figures released by the Ministry of Labor USA, suggesting that the outbreak of the Omicron pandemic has affected the US labor market.

In particular, new applications for unemployment benefits increased by 55,000 in the week ended January 15, climbing to 286,000 applications, from 231,000 a week earlier. It is noted that this is the highest number of new applications since October 16, 2021, when they were at the lowest level of more than 50 years.

Economists in a Dow Jones poll expected new unemployment benefit applications to reach the seasonally adjusted 225,000 applications.

The number of people already receiving unemployment benefits, meanwhile, also rose by 84,000 to 1.64 million Americans, according to the US Department of Labor, returning to pre-pandemic levels.

The latest data suggest that the wave of cases caused by the Omicron variant of the coronavirus has increased the number of Americans out of the labor market.

Nevertheless, the number of people losing their jobs is still extremely low and is likely to remain so, as companies find it difficult to find employees amid the worst labor shortages in decades and fierce competition for staff.

Significant improvement was also recorded by manufacturing activity in the Philadelphia area compared to the previous month, showing that businesses are still growing despite the outbreak of the Omicron variant and persistent shortages of manpower and supplies, according to data from the Federal Reserve Bank of Philadelphia.

In particular, the index rose by 8 points in January and rose to 23.2 points, from 15.2 points in December.

It is noted that economists in a Wall Street Journal poll expected an improvement in the index but at a slower pace, setting the bar at 18.6 points.

Nearly 31% of businesses surveyed by the Federal Reserve Bank of Philadelphia reported an improvement this month, and only 7% reported a deterioration, with the majority of businesses (60%) reporting that their business remained unchanged.

The index of current shipments also improved, by 6 points, reaching 20.8 points.

The index of new orders also showed a slight increase, which had fallen by 34 points in the previous month, as it increased by 4 points to 17.9 points in January. More than 36% of companies reported increases in their new orders, compared to 18% who reported reductions.

Overall, companies continued to talk about improving employment, but the index fell from 33.9 points in December to 26.1 points in January.

The average weekly work index decreased from 30.4 points to 9.6 points, which is the lowest measurement since September 2020.