S&P sees slight gains after jobs data; Amazon knocks Nasdaq lower

February 1, 2019

By Sruthi Shankar

(Reuters) – The S&P rose marginally on Friday, as early optimism from a surge in January job growth was offset by Amazon.com Inc’s gloomy outlook that battered other retail stocks.

The online retailer fell 4.2 percent after its quarterly sales forecast fell short of Wall Street estimates, overshadowing its record sales and profit during the holiday season.

The results weighed on the Nasdaq, while retailers Walmart Inc, Macy’s Inc and Kohl’s Corp dropped about 2 percent. The S&P consumer discretionary index fell 1.4 percent.

The jobs number is a positive factor, but there are online retailers pointing to U.S. consumers spending less, said Cliff Hodge, director of investments at Cornerstone Wealth.

“They’ve been in a very strong environment, but you can see things start to slow down a little bit.”

The Labor Department report showed nonfarm payrolls jumped by 304,000 jobs last month, the largest gain since February 2018. Economists polled by Reuters had forecast payrolls increasing by 165,000.

The report was followed by better-than-expected ISM manufacturing activity numbers for January.

“It is a well-received number overall, with strong job gains and also solid wage gains, but not at a concerning level for the Fed or a sharp negative impact on corporate profit margin,” said Jon Adams, investment strategist at BMO Global Asset Management.

The report came two days after the U.S. central bank signaled its three-year interest rate hike campaign might be ending because of rising headwinds to the economy.

Even as the United States remains on a steady footing, investors are concerned that a slowdown overseas could hurt profit growth, with high-profile companies such as Apple Inc warning of slowing demand in China.

Data showed China’s manufacturing sector shrank for the second straight month in January, heightening risks for global growth amid a trade war with United States.

At 12:58 p.m. ET the Dow Jones Industrial Average was up 113.74 points, or 0.45 percent, at 25,113.41, the S&P 500 was up 4.38 points, or 0.16 percent, at 2,708.48 and the Nasdaq Composite was down 7.09 points, or 0.10 percent, at 7,274.65.

Exxon Mobil Corp and Chevron Corp jumped more than 3 percent after the oil majors reported better-than-expected quarterly profits, boosting the Dow Jones industrial index.

The S&P energy index rose 2.2 percent, led by higher oil prices and upbeat earnings in the sector.

Cigna Corp fell 2.4 percent after the health insurer forecast 2019 revenue and earnings below estimates.

Real estate stocks dropped 1.4 percent, leading declines among the defensive group.

Advancing issues outnumbered decliners for a 1.27-to-1 ratio on the NYSE and a 1.33-to-1 ratio on the Nasdaq.

The S&P index recorded 29 new 52-week highs and no new lows, while the Nasdaq recorded 43 new highs and 15 new lows.

(Reporting by Sruthi Shankar and Amy Caren Daniel in Bengaluru; Editing by Shounak Dasgupta)