John Hancock: Weekly Market Recap Week Ended February 7th
U.S. employers added 225,000 jobs in January, exceeding economists’ expectations and topping 2019’s monthly average gain of 175,000. Although the unemployment rate rose to 3.6% from 3.5%, the small increase was attributed largely to more Americans re-entering the workforce to look for jobs.
Among the factors that fueled the week’s rally was a move by China to slash tariffs on U.S. imports, in line with a recent phase one trade deal. In addition, quarterly earnings generally met or exceeded analysts’ expectations and initial fears about the economic impact from the coronavirus outbreak eased somewhat.
Earnings on the bubble
With fourth-quarter reports in from nearly two-thirds of the companies in the S&P 500, it remained a close call as to whether earnings will rise slightly or decline compared with the same quarter a year earlier. According to FactSet, the earnings growth rate was 0.7%, based on actual results as of Friday and expectations for companies that haven’t yet reported.
China’s rough start
A Chinese stock market benchmark tumbled nearly 8% on Monday—its steepest decline since August 2015—as investors reacted to the coronavirus outbreak following an extended trading break during China’s Lunar New Year celebration. China’s central bank responded to the coronavirus fears by injecting cash into the nation’s financial system.