It’s a Quiet Week for Stocks After Mixed Earnings from Apple and Amazon.com

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It’s a quieter week for stocks after mixed earnings from major technology companies and big economic news.

The S&P 500 rose 1.6 percent between Friday, January 27, and Friday, February 3. It was the fourth gain in the last five weeks, bringing the index back to its highest level since late August.

Apple (AAPL) and Meta (META) climbed after some bright spots emerged from quarterly results. Currencies and production issues made AAPL’s numbers miss, but analysts said its underlying growth story remained intact. META reported strong revenue and refocused on profitability. Amazon.com (AMZN) and Alphabet (GOOGL), on the other hand, are still struggling. AMZN issued weak guidance and GOOGL’s advertising business kept deteriorating.

Biggest Gainers in the S&P 500 Last Week
Align Technology (ALGN)+27%
Meta Platforms (META)+23%
Grainger (GWW)+18%
Pentair (PNR)+15%
A.O. Smith (AOS)+14%
Source: TradeStation Data

There was also confusingly good news on the economy. Federal Reserve Chairman Jerome Powell spoke of “disinflation” and refused to commit to aggressive interest-rate hikes. That’s potentially good news for stock-market bulls. Two days later, the Labor Department reported job growth of 517,000 in January — almost triple the forecast amount. Initial jobless claims and unemployment also surprised to the downside. Those items could be negatives for bulls because they may keep interest rates high.

Still, wage growth matched estimates. Other numbers from the fourth quarter suggested runaway wage inflation isn’t underway. Those include productivity (higher than expected) and the employment cost index (lower than expected.)

Together, those points seemed to indicate a healthy economy returning to normal from three years of unprecedented disruptions.

Meta Platforms Jumps

All major sectors rose last week aside from energy, utilities and health care.

Communications was the top performer thanks to META. Advanced Micro Devices (AMD) led the technology sector by forecasting strong sales of data-center chips. Wall Street’s also looking for a rebound in the struggling PC market.

Consumer discretionaries gained amid broad strength in travel stocks, homebuilders and automakers. Tesla (TSLA) neared $200 after raising the price of its Model Y by $1,000 and getting a favorable tax-credit ruling from the Treasury Department.

Three of the five biggest gainers in the S&P 500 were smaller industrials that beat estimates: Grainger (GWW), Pentair (PNR) and A.O. Smith (AOS). That kind of news is potentially consistent with a strong economy. Combined with the strong job gains, it seems to undermine worries about a looming recession.

S&P 500, showing key technical patterns.

Charting the Market

Last week’s advance pulled the S&P 500’s 50-day moving average above its 200-day MA. Some chart watchers much view that “golden cross” as a sign the index’s longer-term direction has turned higher. Prices also broke the trend line running along 2022’s peaks. Is the bear market ending?

Biggest Decliners in the S&P 500 Last Week
ConocoPhillips (COP)-13%
Hess (HES)-12%
Electronic Arts (EA)-12%
Marathon Petroleum (MPC)-11%
Match (MTCH)-9.7%
Source: TradeStation Data

Still, some traders may notice how prices stalled around 4200. The level is near peaks from late August and early June, which could suggest it’s still resistance. The Relative Strength Indicator (RSI) also neared an overbought condition last week — a potential sign of exhaustion. (The Nasdaq-100 had similar patterns.)

Two other charts could impact sentiment. First, the U.S. dollar rebounded above the previous week’s high after failing to hold a low. That kind of bullish outside candle is sometimes considered a reversal pattern. Second, the 10-year Treasury yield held its December low of 3.4 percent. A rebound in rates or the greenback could hurt stocks.

The Week Ahead

This week’s calendar is much quieter than last’s. The first big economic event is a speech by Fed Chair Powell at 11 a.m. ET tomorrow.

Tuesday also has earnings from Royal Caribbean (RCL), Chipotle Mexican Grill (CMG) and Enphase Energy (ENPH).

Oil inventories are due Wednesday morning, along with results from Uber Technologies (UBER), MGM Resorts (MGM) and Walt Disney (DIS).

Thursday brings initial jobless claims. It’s also the busiest session for earnings, featuring names like PayPal (PYPL) and PepsiCo (PEP), AbbVie (ABBV).

The main items on Friday are consumer sentiment and a speech by Patrick Harker, a new voting member of the Fed.

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