Tech Stocks Fuel Wall Street Rebound Before Data: Markets Wrap

Priya Misra, core plus bond ETF portfolio manager at JPMorgan, sees markets in a "show me" state on AI capex. Bloomberg

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(Bloomberg) — Another rally in tech companies after an artificial intelligence-driven rout drove stocks higher before economic data that will help shape the Federal Reserve outlook. Bitcoin fell below $70,000. Gold topped $5,000.

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Following a surge that added $1 trillion to the S&P 500’s value, the index kept edging higher on Monday. Tech firms that were at the center of the recent market selloff continued to lead market gains. A gauge of chipmakers climbed 1.3% while a closely watched exchange-traded fund focused on software firms extended a back-to-back advance to more than 5%.

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The January jobs report, scheduled for release on Wednesday, is expected to show employers added 69,000 jobs. The unemployment rate is projected to hold steady at 4.4%. The data will also include historical revisions that are anticipated to show a sizable downward adjustment to payrolls in the year through March 2025. 

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“A so-so jobs report probably won’t have much of an impact, but traders expecting stocks to bounce on weak numbers have to consider the possibility that a choppy stock market may simply treat good news as good and bad news as bad,” said Chris Larkin at E*Trade from Morgan Stanley.

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In Friday’s consumer price index, economists will look for more evidence that inflation is on a downward trend. Meantime, figures on Tuesday are projected to show another month of solid retail sales.

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Action in the US bond market was fairly muted following an earlier slide driven by news that Chinese regulators were said to be urging banks to curb Treasury exposure amid market risks.

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The S&P 500 added 0.3%. The yield on 10-year Treasuries rose one basis point to 4.22%. The dollar fell 0.6%. Alphabet Inc. is looking to raise about $15 billion from a US high-grade dollar bond sale.

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Oil edged higher after the US advised ships to steer clear of the Strait of Hormuz, reviving a risk premium that had ebbed in recent days amid nuclear talks. Japanese equities jumped to a record after Prime Minister Sanae Takaichi secured a historic election triumph.

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This week’s employment data and CPI report may prove pivotal for the Fed as it balances slowing job growth against lingering inflation risks, according to Jason Pride and Michael Reynolds at Glenmede. A meaningful upside surprise in goods or services inflation could narrow the runway for rate cuts in 2026, they added.

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“This week brings two of the most important economic data releases in the same calendar week, a rare occurrence due to the brief government shutdown earlier this month,” said Arthur Hogan at B. Riley Wealth. “That means both sides of the Federal Reserve’s dual mandate will be represented with fresh data.”

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For each report, a “Goldilocks” outcome that implies solid growth and stable price pressures is the best case for the market, helping support stocks, according to Tom Essaye at The Sevens Report.