S&P 500 falls on robust jobs data, big tech earnings disappoint, ASX futures higher

ASX 200 futures are trading 12 points higher, up 0.16% as of 8:20 am AEDT.

The S&P 500 briefly rallied but closed at session lows after a trifecta of disappointing big tech earnings (Apple, Alphabet and Amazon), the US adds an unexpected ~500,000 jobs in January, bond yields bounce and gold prices plummet and CNN's fear and green index hits 'extreme greed' for the first time in over a year.

Let's dive in.

S&P 500 Session Chart

MARKETS

• Disappointing big tech earnings and a stronger-than-expected US employment report weighed on risk appetite
• Bearish talking points for the market this week include: Underwhelming Q4 earnings, cost pressures and supply chain constraints still lingering, labor market still too tight for the Fed, sell-side strategists pushing back against the rally and geopolitical tensions
• Bullish talking points for the market this week include: Peak Fed, soft landing expectations plus labor market strength, rebound in US housing activity, low earnings expectations and aggressive company cost cutting actions
• US dollar index caps off first weekly gain after three straight weekly declines
• Bank of America’s Bull & Bear indicator up to 4.2, the highest since March 2022

EARNINGS

Apple (+2.4%): EPS, revenue and most segments missed analyst expectations; China production issues and a difficult macro environment weighed

• "Foreign exchange will continue to be a headwind, and we expect a negative year-over-year impact of 5 percentage points.” - CFO Luca Maestri
• "We're now at a point where production is what we need it to be. And so the problem is behind us.” - CEO Tim Cook
• "The [PC] industry is very challenged ... The industry is contracting. I think from us, though.. we're well positioned in the market, albeit I think it will be a little rough in the short term"

Alphabet (-2.75%): EPS and revenue missed analyst expectations; cost cutting work efforts underway

• "Our revenues this quarter were impacted by pullbacks in advertiser spend and the impact of foreign exchange.” CEO Sundar Pichai
• "In Q4, we saw slower growth of consumption as customers optimise GCP cost, reflecting the macro backdrop. Google Cloud had an operating loss of $480m”

Ford (-7.6%): revenue miss and next quarter guidance was light; flagged a further deterioration of the macro environment; Covid restrictions in China led to weaker-than-expected demand

• "The market forces, I think, are going to drive average transaction prices down, we think probably around 5%. And that will come, some from the dealer margins, but also from higher incentives.” - CFO John Lawler

Amazon (-8.4%): EPS, online sales and AWS sales missed; Q1 sales guidance was light and managed flagged continued weakness for AWS

• "Probably the number one priority that I spend time with the team on is reducing our cost to serve and our operations network.” - CEO Andy Jassy

ECONOMY

• US services index jumps to 55.2, well-above consensus of 50.4
• US jobs surges by more than half a million in January (FT)
• Jobs report to pressure Fed to hike and keep rates high (Bloomberg)
• Eurozone PMIs confirm a return to growth in January (Reuters)
• Global food prices down for tenth straight month in January (Reuters)
• Big stimulus in China unlikely as focus shifts to boosting consumption (Reuters)
• China services sector expands for first time in five months (Reuters)

Deeper Dive

Key Events

ASX corporate actions occurring today:

• Trading ex-div: None
• Dividends paid: None
• Listing: None

Economic calendar (AEDT):

• 6:00 pm: Germany factory orders
• 9:00 pm: Eurozone retail sales