Stocks are falling after hiring in January blew past expectations, raising concerns that the Federal Reserve will lift interest rates aggressively to prevent the economy from overheating.

The U.S. added 467,000 jobs last month, the Labor Department reported today. That crushed economists’ expectations for 150,000 hires, driving stocks lower despite, Inc. (AMZN) gaining after a solid earnings report.

Key Takeaways

  • Stocks are falling for a second day after January hiring crushed expectations and raised concerns that the Federal Reserve will lift interest rates aggressively.
  • Amazon is gaining around 10% and Snap more than 40% after reporting solid earnings growth.
  • The yield on the 10-year Treasury note jumped past 1.9%, its highest in more than a year. Crude oil soared past $90 per barrel.

The Dow Jones Industrial Average, S&P 500, and Nasdaq indexes are all lower, following big declines in each yesterday. Crude oil soared past $90 per barrel for the first time since 2014, adding to inflation concerns. The yield on the 10-year Treasury note jumped past 1.9%, its highest in more than a year.

Shares of Amazon rose 10% after the company reported better-than-expected earnings, helping support the Nasdaq. Snap Inc.’s (SNAP) stock price is 45% higher.

Among companies reporting earnings today are Bristol Myers Squibb Company (BMY), Cboe Global Markets, Inc. (CBOE), The Hartford Financial Services Group, Inc. (HIG), and Regeneron Pharmaceuticals, Inc. (REGN). 

U.S. Bureau of Labor Statistics

Unemployment was little changed at 4%, the Labor Department said. The report noted that nonfarm employment has increased by 19.1 million since April 2020 but is still 2.9 million short of pre-pandemic levels in February 2020. 

Overseas, stocks in Europe fell following an interest rate hike by the Bank of England and signs that the European Central Bank may move to fight inflation by shifting its monetary policy. In Asia, stocks in Hong Kong took off following a three-day holiday, with the Hang Seng adding 3.2%, led by gains in banking and technology stocks. In Japan, the Nikkei index rose nearly 1%.

The dollar is little changed against the euro. Prices of cryptocurrencies, including Bitcoin and Ethereum, gained.

Today’s Headlines: Quick Hits

Amazon is raising the price of its annual Prime memberships from $119 to $139 per year. Amazon said that it was raising the price because of “expanded membership benefits” and rising costs of labor and transportation.

Intuit Inc. (INTU) said that TurboTax has teamed up with Coinbase Global, Inc. (COIN) to allow users to deposit tax refunds into cryptocurrency accounts. Coinbase has started a direct deposit program that will allow TurboTax to send users’ state and federal tax refunds to Coinbase accounts, with the option to automatically convert dollars into cryptocurrency.

Ford Motor Company’s (F) stock price is lower after its fourth quarter earnings missed analyst expectations. The automaker missed production targets that analysts were expecting due to supply chain problems, including a shortage of computer chips.

Shares of The Clorox Company (CLX) are falling as rising costs hit its profit margins. The maker of disinfectant wipes and other cleaning products said that higher-than-expected commodity prices and manufacturing costs cut into profit margins.

Shares of Pinterest, Inc. (PINS) are jumping as the company posted its first annual profit and hit $2 billion in sales. The e-commerce company said that its first quarter revenue would grow “in the high teens,” about in line with analyst expectations.

Mallinckrodt plc (MNKKQ) has won court approval to exit bankruptcy under a $1.7 billion opioid deal. The plan will hand control of the specialty pharmaceutical company to creditors.

Amazon’s Cloud Nine: The Big Story

Amazon’s growth in its AWS cloud business continues to impress investors. Amazon reported AWS cloud revenue shot up 40% in the fourth quarter to nearly $18 billion. Almost 13% of Amazon’s total revenue comes from AWS now, despite a series of outages in December affecting a wide range of customers, including The Walt Disney Company (DIS) and Slack.

Amazon dominates the cloud business, which rents computing, storage, and networking capability to users. Microsoft Corporation (MSFT) occupies a distant second place, followed by Alphabet Inc.’s (GOOG) Google and Oracle Corporation (ORCL).

The gains in AWS are helping to offset problems in the retail giant’s e-commerce business. Amazon reported that it lost $206 billion in the U.S. and $1.6 billion internationally for its e-commerce business. 

Overall, Amazon reported $137 billion in total revenue for the fourth quarter, up from $125 billion a year ago. Another bright spot for Amazon besides its cloud business was advertising. The company reported that its advertising business grew 32% in the fourth quarter, booking $32 billion in ads—more than Google’s YouTube ads and Microsoft’s advertising sales.

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