Week of 01/30-02/03 Market surges as Fed increase rates 0.25%, earnings create volatility

A volatile week finally came to an end after the Federal Reserve announced to raise rates by 0.25% and big tech companies report earnings. Jerome Powell commented on Wednesday that more interest rate hikes will come as we navigate inflation in 2023. The S&P 500 reacted quickly throughout his whole speech and surged more than 7% on the day.

As we went into Thursday, the market kept climbing on continuation of the Fed announcement and expectations of big tech earnings such as Apple, Amazon, Meta, Microsoft, and Google. Market expectations quickly dissipated as disappointing earning reports came from Apple, Google, and Amazon. All three companies are being affected by global economic demand and could face lower profits this quarter if demand continues to decrease. Microsoft and Meta were a different story as both companies released news on an increased focus on artificial intelligence. Meta had one of the best trading days ever by rising more than 23% in a single day. Nonetheless, it was a volatile and whiplashing after market session during the earning calls.

Friday was full of mixed emotions as the bull run gets cooled down by a stronger than expected jobs report. Reality started sinking in as investors digest the disappointing big tech results in combination of half of a million jobs added to the economy in January. This places a punch in the gut on the hopes of the Fed pausing interest rates anytime soon. The market continues to be significantly higher than where we started at the beginning of the year which might indicate that this volatility has been already priced-in by investors.