After This Week's Fed Rate Hike, Jobs Number Surprise And Key Earnings Reports, What's Next For The Market?

The S&P 500 reached its highest level in five months this week as investors digested another Federal Reserve interest rate hike and a blowout January jobs report.

On Wednesday, the Federal Reserve announced an increase in the fed funds interest rate target by 0.25% to a new range of between 4.5% and 4.75%. The 0.25% rate hike marks another step down in tightening for the Fed following a 0.5% rate hike in December, but economists expect the central bank will issue at least one more rate hike in March in its ongoing battle against inflation.

On Friday, the Labor Department reported the U.S. economy added 517,000 jobs in January, far exceeding economist estimates of 187,000 new jobs. Wage growth dropped to just 4.4% in the month, and the unemployment rate hit a 50-year low of 3.4%.

The tech-heavy Nasdaq Composite gained 3.2% on Thursday following better-than-expected fourth-quarter results from Facebook parent company Meta Platforms. Meta shares jumped 23% on Thursday, its best single-day performance since 2013.

On Monday, the International Monetary Fund raised its 2023 global economic growth forecast from 2.7% to 2.9%. The IMF said growth will "remain weak by historical standards" but will improve slightly to 3.1% in 2024.

Pedal To The Metal

Peloton shares rose more than 26% on Wednesday after the connected fitness equipment maker reported impressive subscription revenue growth and improving margins in the fiscal second quarter.

In the week ahead, investors will get more quarterly reports from BP on Tuesday, Walt Disney and Uber Technologies on Wednesday and PayPal Holdings on Thursday.

Only four out of 11 total S&P 500 market sectors are reporting positive earnings growth in the fourth quarter, according to FactSet.

Economic Numbers

In the wake of the hot jobs report, Wall Street will get more key economic updates on Tuesday when Fed Chair Jerome Powell appears at the Economic Club of Washington, D.C., and on Friday when the University of Michigan releases its preliminary U.S. Consumer Sentiment Index reading for February.

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