NEW YORK MARKET CLOSE: Stocks end losing week red despite nonfarm data

(Alliance News) - Indexes ended red in New York on Friday, bringing equities lower than they were a week ago, as share prices failed to recover from tariff-fuelled sell-offs on Monday.

On Wall Street, the Dow Jones Industrial Average ended down 444.23 points, 1.0%, at 44,303.40. The S&P 500 fell 57.58 points, 1.0%, to 6,025.99. The Nasdaq Composite closed down 268.59 points, 1.4% at 19,523.40.

For the week, the DJIA fell 0.5%, the S&P eased 0.2%. The Nasdaq lost 0.5%.

Solid January nonfarm payrolls data has left the Fed in no hurry to lower cut rates, analysts said on Friday.

According to the Bureau of Labor Statistics, total nonfarm payroll employment increased by 143,000 in January, down from growth of 307,000 in December, which was upwardly revised from a previously reported increase of 256,000. November's figure was also revised upwards to 261,000 from 212,000.

January's increase was lower than the FXStreet-cited consensus of 170,000.

Further, the US unemployment rate edged down to 4.0% in January from 4.1% in December. This was better than the FXStreet-cited consensus, which had expected the rate to remain at 4.1%.

Sarah House at Wells Fargo commented: "The 143,000 rise in nonfarm payroll employment in January came in a little light of expectations, but upward revisions to recent months' hiring and a decline in the unemployment rate to an eight-month low of 4.0% show the labor market remains on solid footing."

"On balance, today's employment data, which included annual revisions, should give the FOMC confidence that it can maintain the federal funds rate at its current level for the foreseeable future. A small swoon in the labor market occurred throughout the first half of 2024 as nonfarm payroll growth slowed sharply and the unemployment rate ground modestly higher. But, the more recent data are indicative of a labor market that has regained its footing. This suggests that the tail risk of a sharp deterioration in the labor market has diminished, and as a result the FOMC can wait to see how the [first quarter] inflation data and economic policymaking play out before taking further action on the federal funds rate."

Also on Friday, the University of Michigan said its consumer sentiment index was weaker at 67.8 in February, compared to the 71.9 expected. Further, the university's inflation expectations survey jumped to 4.3% from 3.3% in January, "suggesting that consumers are expecting inflation to rebound under Trump’s presidency," said StoneX analyst Fawad Razaqzada.

In corporate news, Amazon shares slipped on Friday after the company said it was struggling to keep up with cloud demand.

"It is true we could be growing faster were it not for some of the constraints on capacity," Chief Executive Officer Andy Jassy said on a conference call late Thursday following Amazon's fourth quarter earnings release.

To address cloud computing demand, the ecommerce company plans to spend around USD100 billion to boost its data centre infrastructure and continue investing in its own chips.

Jassy explained the "faster we grow, the more capex we end-up spending" although he stressed, "we don't procure it unless we see significant signals of demand."

Jassy's comments followed what Hargreaves Lansdown's Matt Britzman called a "knockout" fourth quarter earnings release, though first quarter guidance disappointed.

In the quarter, net income rose 88% to USD20.00 billion from USD10.62 billion a year prior, as net sales improved 11% to USD187.79 billion from USD169.96 billion, beating the USD187.32 billion analyst consensus

Fourth quarter diluted earnings per share was USD1.86 compared to USD1.00 in the fourth quarter of 2023, ahead of the USD1.47 forecast.

Amazon cautioned that net sales in the current quarter to March would be between USD151 billion to USD155.5 billion, well below forecasts for USD158.5 billion.

A strong dollar will knock first-quarter revenue by USD2.1 billion, Amazon added. The first quarter of 2025 would also have one less trading day due to the leap year.

Operating income is expected to be between USD14.0 billion and USD18.0 billion, compared with USD15.3 billion in first quarter 2024.

Amazon shares ended down 4.1%.

Illumina shares fell on Friday despite having reported a stronger fourth quarter, as the company finds itself in the middle of US-China trade tensions.

Illumina on Thursday said it swung to fourth quarter net income of USD187 million from a net loss of USD176 million a year prior. Diluted earnings per share was USD1.17 versus a loss per share of USD1.11.

Fourth quarter revenue was USD1.10 billion, down from USD1.12 billion the year prior.

Chief Executive Officer Jacob Thaysen commented: "The Illumina team delivered fourth quarter revenue that exceeded our expectations, and we made significant progress in 2024 toward our goals to drive customer-centric innovation, margin expansion, and EPS growth. For 2025, we will continue our transformation, executing our refreshed strategy that prioritizes a sharp focus on customers and our own operational excellence in order to drive Illumina forward."

Shares fell on Friday however, after the Chinese Commerce Ministry placed the company on its list of "unreliable entities," part of China's pushback against new Trump Administration tariffs, the Wall Street Journal reported.

Illumina says the tariff bout hasn't affected guidance, however: "Fiscal year 2025 guidance does not attempt to reflect any impact from the recent China Ministry of Commerce announcement and assumes a continuation of the current macroeconomic and political environments."

But Illumina's China business accounts for 7% of total revenue, the Journal reported. Executives said late Thursday that they are working to resolve issues with China.

Illumina shares ended down 9.6%.

Fortinet shares ended higher on Friday after the company said it expects to see further revenue growth following robust performance in 2024.

In 2024, Fortinet net income jumped 52% to USD1.75 billion in 2024 from USD1.15 billion a year prior. Diluted earnings per share were USD2.26, up 55% from USD1.46.

Total revenue increased 12% to USD5.96 billion from USD5.30 billion, as the cost of revenue fell 6.4% to USD1.16 billion from USD1.24 billion. Of this Service revenue rose 20% to USD4.05 billion from USD3.38 billion whereas product revenue declined 1.0% to USD1.91 billion from USD1.93 billion.

Chair & Chief Executive Officer Ken Xie commented: "We continue to execute our strategy of investing in the high-growth Unified [Secure Access Service Edge] and Security Operations markets, while strengthening our position in Secure Networking. Our customers are increasingly recognising the benefits of a single-vendor approach to SASE, and we expect to emerge as a leader in this space, being the only company to natively develop all SASE functions within a unified operating system, FortiOS, which seamlessly integrates networking and security capabilities."

Looking ahead, in 2025 Fortinet expects to report revenue in the range of USD6.65 billion to USD6.85 billion, representing a 12% increase year-on-year at the lower end.

The company anticipates further expansion of its service revenue, setting guidance in the range of USD4.58 billion to USD4.73 billion, reflecting a minimum increase of 13%.

Fortinet ended up 2.8%.

The pound traded at USD1.2404 late Friday, down from USD1.2437 on Thursday. The euro eased to USD1.0326 from USD1.0388. Against the yen, the dollar was at JPY151.40, falling from JPY151.44.

Brent was quoted at USD74.66 a barrel on Friday, up from USD74.24 on Thursday. West Texas Intermediate was at USD71.01, up from USD70.50.

Gold was quoted at USD2,860.57 an ounce on Friday at the time of the New York close, up from USD2,855.29 on Thursday.

In Europe on Friday, the FTSE 100 closed down 0.3% in London. The CAC 40 lost 0.4% in Paris. The DAX 40 ended down 0.5% in Frankfurt.

In Asia, the Nikkei 225 in Tokyo closed down 0.7%. The Shanghai Composite gained 1.0%. The Hang Seng Index in Hong Kong ended up 1.2%. The S&P/ASX 200 lost 0.1% in Sydney.

Monday's corporate calendar has full-year results from McDonald and Vertex

The global economic diary has China CPI and PPI.

By Aidan Lane, Alliance News reporter

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