Amazon to reverse Nasdaq losses, NFP wage growth in brief
Facebook was badly hammered yesterday, and even a 25% drop couldn’t attract buyers, so it’s one of America’s biggest tech stocks – and the world has lost some $250 billion in value in a wink.
Of course, Facebook’s 26% drop during the session weighed heavily on the S&P500 and Nasdaq. The S&P500 lost around 2.5% while the Nasdaq lost around 4%, quickly returning half of the gains of the past two days. Volatility picked up, with the VXN index, which is a measure of Nasdaq stock volatility, climbing back above the 30 mark, while other tech stocks suffered with Facebook, Apple losing around 1 .60%, Google lost more than 3.50%, Netflix more than 5.50%, and Amazon almost 8%!
But some of them will have an easier time recovering today, and among them we have Amazon, which saw its share price soar almost 20% in after-hours trading after the he earnings announcement seemed surprisingly satisfying to its investors.
Today, there are no major earnings on the calendar, so tech investors can enjoy what should be a very positive session, thanks to… Amazon!
With the high-profile earnings out of the way, we will start to see volatility subside from next week. But the cards are clearly redistributed within the FAANG – where Apple, Amazon and Google have shone, while Facebook and Netflix have lost big this past earnings season.
One Last Thing to Watch: US Employment Data
Wage growth will be larger than the number of non-farm payrolls added to the US economy in today’s release because first of all we know December’s numbers are being hit hard by the wave omicron and that they are not representative of the overall health of American jobs. market, and second, even if we see a negative NFP impression, it won’t matter much for the expectations of the Federal Reserve (Fed).
But wage growth matters, because higher wages mean more sticky inflation, and more sticky inflation means more hawkish Fed policy, and more hawkish Fed policy means less cash and less appetite for Investors.
Wages may have risen more than 5% in the United States in January, which would be the strongest growth since March of last year, and has the potential to reignite Fed hawks. But the good news is that the Fed hawks have gone so far lately that even strong wage growth wouldn’t do much for the overall market mood. The game is now on the earnings front, and the latest reaction to Amazon earnings suggests that we are likely to have a good session ahead of the weekly closing bell.
She finally said it!
European Central Bank (ECB) President Christine Lagarde has finally said that inflation in Europe will last longer than expected due to soaring energy prices. Well done !
At yesterday’s press conference, Lagarde claimed that the ECB is now ready to adjust all tools accordingly; it could mean a quicker end to bond buying and higher rates!
The March projection update will be decisive in what the ECB does next, but we already know that the March projections will include high inflation, and will probably say “raise rates Christine!” “.
Money markets are already anticipating a 10 basis point hike from the ECB by July this summer. EURUSD rebounded to 1.1470 after the ECB, exiting its 100-DMA for the first time since last June. The next major resistance is near 1.1550, which is the 38.2% Fibonacci retracement last May – that January decline, which should distinguish between the true negative trend and a medium-term bullish reversal. So we have a thick layer of 1.15/1.1550 offers to eliminate before we call the end of the Euro weak against the US Dollar.
Against the Pound it’s a whole different story as the Bank of England (BoE) is already raising interest rates and the less dovish ECB may give relief to EURGBP, but that may not reverse. the euro’s medium-term negative trend. grind. Because while a 25bp hike was widely expected from the BoE at yesterday’s meeting, seeing four out of nine members vote for a 50bp hike was a surprise and a warning that rate hikes in the UK could continue in future meetings. Won’t that help push the Cable to the 1.40 level as yesterday’s hawkish move couldn’t hold the pair above 1.36 even with a dollar largely relaxed American.
And speaking of the dollar, the US dollar index is again testing its 50-DMA on the downside, and this could be a good level for dupbuyers to join the dollar buyers, as hawkish expectations from the Fed are here to to stay.