Markets Have “Clash Of The Titans” Week Of Earnings, Good Jobs Report Results In Hawkish Tilt In Fed Expectations

Key Takeaways

  • The S&P 500 closed at 4,500.52 up from 4,431.85  last Friday. The VIX settled at $23.22 and despite fluctuations, the term structure appears to be normalizing. 
  • Thursday saw the largest drop in market-cap value when Meta missed expectations and gave weak guidance. Friday saw the largest-ever market-cap value gain for $AMZN. 
  • Jobs numbers came in far above expectations at 467,000. The months of November and December also had upward revisions of about 700,000 jobs in total.
  • Expectations for a more hawkish Fed from the “so good it’s bad” jobs print moved up in Fed Futures markets. The possibility for a 50 bps hike also increased.

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This was a notable week in many ways. There were some amazing earnings from Tech Titans and the jobs report confirmed there’s still a lot of underlying strength in the economy. However, the print reduces the Fed’s maneuvering room since it’s getting hard to say we’re not at, or very close to, full employment. Markets suggested, in the wake of the report, that the chances for more rate hikes and the possibility of a potential .50 bps hike in March increased. Nomura officially predicted this outcome.

However, though the doves may be subdued as inflation is at 40-year highs, ther...
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