Dollar drops ahead of NFPs

S&P 500 and Nasdaq

S&P 500 and Nasdaq set fresh records, led by tech stocks; NVIDIA shares are now up 90% year-to-date.

The Federal Reserve

Day 2 of testimony on Capitol Hill yesterday heard Federal Reserve Chairman Jerome Powell indicate that US rate cuts may not be too far off if inflation signals cooperate. No precise timetable was offered, but he noted that the day could be coming soon. "We're waiting to become more confident that inflation is moving sustainably at 2%. When we do get that confidence, and we're not far from it, it'll be appropriate to begin to dial back the level of restriction,"

Powell said in response to a question about rates and inflation. He said the cuts would be so the Federal Reserve (Fed) doesn't "drive the economy into recession rather than normalising policy as the economy gets back to normal. " At the beginning of the year, futures traders were betting the Fed would start in March and keep going until it had cut six or seven times this year. The outlook now is for the first cut to come in June, with four reductions totaling a full percentage point by the end of 2024.

JOLTs

Meanwhile, throughout the week, a series of job-related indicators were published. On Wednesday, the Automatic Data Processing (ADP) survey showed that the US private sector created 140,000 jobs last month; job openings and labor turnover survey (JOLTs) job openings came in at 8.863 million, marginally below consensus. On Thursday, the number of people claiming unemployment benefits remained at 217,000, 2,000 more than anticipated.

This data points out a gradual easing of labour market conditions. The number of people who quit their jobs last month fell to three. This bodes well for slower wage inflation and overall price pressure in the US economy. All eyes are now on non-farm payrolls. Job creations are expected to rise by 200K in February, less than January's 353K. The unemployment rate is seen holding at 3.7%.

Gap

As expected, US clothing giant Gap Inc.'s earnings were led by its Old Navy brand. Gap's earnings came in well ahead of Wall Street's expectations. Earnings per share came in at 49 cents, vs. 22 cents expected. Revenue: $4.3Bln vs. $4.22Bln expected. Sales at Old Navy grew 6% to $2.29 billion, and Gap's overall gross margin surged 5.3 percentage points to 38.9%. Shares of Gap jumped about 9% in extended trading following the report.

Broadcom

Broadcom, a chip supplier to Apple, beat expectations in its fiscal first quarter. Earnings came in at $10.99 per share, higher than the $10.4 anticipated. Revenue reached $11.96 billion, better than analysts’ expectations of $11.79 billion. However, investors were disappointed by revenue from its semiconductor business, even as it said that AI is helping fuel demand.

The company's semiconductor division posted revenue of $7.39 billion, missing the $7.7 billion projected by analysts. Sales in fiscal 2024, which ends in October, will be $50 billion, the company said Thursday. The company has suspended quarterly projections while it integrates and restructures its acquisition of software maker VMware.