Another Friday capped another packed week of news. At the close the Dow was up 186 points to 20,071 on lighter trading volume. A strong jobs report overcame disappointing earnings from Amazon. For the week the Dow lost about 0.1% but managed to overcome a midweek selloff. Banks were the big movers today as President Trump signed an executive order to review Dodd-Fank banking regulations.
The January jobs report or “JJR” was stronger than expected with 227,000 new jobs being created mostly in professional services and construction. The gurus were looking for a gain of 175,000. The unemployment rate ticked up to 4.8% from 4.7%. The rise in unemployment rate might be due to a rise in the labor force participation rate which moved up two tenths to 62.9%. The report also showed that hourly wages rose only 0.1% falling short of expectations calling for a 0.3% gain. This shows that wage inflation is not accelerating at the moment.
Amazon reported revenue up 22% and net income up 54%. The results however were disappointing because analysts were hoping for revenue growth of 23%. Amazon also issued cautious forward guidance and this, combined with the revenue miss, sent shares lower. Analyst comments were mixed as some think the current heavy investment cycle of fulfillment centers, logistics infrastructure and the bug eyes in Seattle will hold back margins. Others said the investments will drive long term value and hiked share target prices. I think CEO Jeff Bezos knows that investing in long term visions can be hard in an era of instant gratification and high expectations. At least Amazon is not in the position of being bought out by the Hudson’s Bay company like Macy’s currently is rumored to be.