New York morning: employment data in focus

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

The focus of investors' attention today will be the publication of the delayed due to the shutdown January labor market report and the final employment statistics for the year. The consensus assumes the appearance of 65 thousand new jobs outside of agriculture after 50 thousand a month earlier, with unemployment remaining at the December level of 4.4%.

We assume that the actual hiring data may be higher than expected and amount to 110-130 thousand due to the one-off effect of the return of civil servants to the statistics. Of particular importance will be the revised data for last year. They are expected to explain the reason for the downward revision of 930 thousand new jobs, as well as an assessment of the real state of net hiring in the United States. It is noteworthy that the White House began to prepare the investment community in advance for weak statistics and a negative change in the final estimates for 2025. The most favorable option for the stock market would be indicators without strong deviations from forecasts.

Fed Governor Michelle Bowman's scheduled speech this Wednesday, February 11, may contain new signals regarding the future course of monetary policy after weak new job openings (JOLTS) data and mixed retail sales statistics.

The bond market will focus on the auction for placement of 10-year treasuries. Given the noticeable strengthening of demand for these securities in recent days, we do not forecast negative surprises.

Before the trading session opens , Shopify (SHOP), T-Mobile (TMUS), McDonald's (MCD), Vertiv (VRT), Hilton (HLT), Unity (U), Humana (HUM) will report quarterly results. At the postmarket , AppLovin (APP), Cisco (CSCO), Albemarle (ALB), Motorola Solutions (MSI), HubSpot (HUBS), Equinix (EQIX), and Confluent (CFLT) will publish reports.

Futures on major U.S. indices show neutral dynamics due to expectations of a strong report on the labor market, which may confirm the resistance of the U.S. economy to high rates. We assess the balance of risks for the upcoming session as neutral with increased volatility. A fall of the S&P 500 below 6900 points will be a signal to revise our assessment towards the negative, and growth above 6990 will lead to the activation of a positive scenario, which will open the way to new highs for the benchmark.

- Cloudflare (NET) securities are gaining more than 15% on the premarket after the company released a strong financial report for last quarter and an optimistic outlook for the current quarter. The company's operating margin significantly exceeded analysts' expectations. The market positively assessed the service's ability to monetize its cybersecurity and AI infrastructure solutions.

- Shares of Mattel (MAT) plunged 30% due to lackluster sales during the holiday season. The management explained the underperformance to the average expectations of investors by the decline in consumer activity after its surge on the back of the popularity of the movie "Barbie". Pressure on the securities was intensified by a conservative net profit forecast for the year, which failed to meet investors' expectations.

- Lyft (LYFT) quotes are losing more than 17% before the start of the main session, although the company's revenue for the fourth quarter matched the average forecasts. The main reason for the sell-off was the cautious gross bookings guidance for the current quarter, which pointed to increased competition with Uber and slower growth in the rideshare market. Investors also expressed concerns about the sustainability of the long-term margins of the business.

- Astera Labs (ALAB) shares are down about 10% in the premarket amid the release of earnings and news of a CFO change, although the AI infrastructure chip maker's financial results beat Wall Street consensus.

- Shares of Robinhood Markets (HOOD) are down more than 7% before the open of major trading. The company reported fourth-quarter revenue of $1.28 billion against LSEG's forecast of $1.34 billion, while transaction revenues came in at $776 million against market-wide expectations of $801.4 million, indicating a cooling in user trading activity.

Trading on February 10 on the U.S. stock exchanges ended multidirectionally. Dow Jones (+0.1%) and equal-weighted S&P 500 (+0.7 p.p. to S&P 500) updated historical highs. The "classic" S&P 500 was down 0.33%, the Nasdaq 100 was down 0.56%, and the Russell 2000 lost 0.34%.

The session was characterized by active capital flow from the securities of technology giants into defensive assets and cyclical companies with lower capitalization against the background of weak macro data. Most of the Magnificent Seven, as well as the broad AI infrastructure segment, showed negative dynamics, which caused the technology sector to lag.

The defensive utilities sector (XLU: +1.66%), which traditionally benefits from lower bond yields, led the way to the upside. The financial sector (XLF: -0.72%) was the outsider, as shares of investment advisors and brokers (SPGI: -9.71%, SCHW: -7.42%) fell due to concerns about increased competition from new AI-based tax planning platforms.

The main macroeconomic event of the day was the publication of retail sales data for December, which turned out to be much weaker than forecasts. The overall indicator remained at zero level with forecasts suggesting growth of 0.4%, while sales of the benchmark group of goods used to calculate GDP decreased by 0.1%.

These statistics caused an active rally in the bond market. Yields on the long end of the curve fell by about 7 bps, reflecting investors' expectations of accelerated Fed rate cuts. However, our analysis shows that the weak statistics is largely due to aggressive seasonal adjustment. The data would have registered positive dynamics at the consensus level if a slightly more loyal seasonal smoothing had been applied in their calculation.

Geopolitical news and the rhetoric of the regulator's representatives put additional pressure on the market participants' sentiment. US President Donald Trump allowed the possibility of sending a second aircraft carrier to strike Iran if negotiations fail, which added uncertainty.

Representatives of the Fed leadership maintained a moderately "hawkish" attitude. The head of FRB Cleveland Beth Hammack said that rates may remain at a restrictive level for a long time. Her colleague from Dallas Laurie Logan noted the possibility of easing monetary policy only in case of a clear cooling of the labor market.

- Spotify 's quarterly earnings and active users (SPOT: +14.8% at the close on February 10) significantly exceeded forecasts thanks to a record influx of subscribers in the ad-supported segment. Investors reacted positively to the company's operating profit and audience growth rate guidance for the current quarter, as it was above Wall Street's expectations.

- Datadog (DDOG: +13.7%) shares jumped on the back of exceeding revenue and order bookings forecasts, with management noting a solid increase in the number of large corporate customers. Despite the conservative ranges of the full-year guidance, analysts considered them stronger than the most pessimistic scenario suggested.

- BP (BP: -5.7%) announced the suspension of its $750 million per quarter share buyback program. Management's decision to abandon its commitment to return 30-40% of operating cash flow to shareholders triggered a sell-off across the oil and gas sector.

- Despite exceeding net income forecasts, Coca-Cola's (KO: -1.5%) revenue missed analysts' expectations due to weak sales. Management's 2026 organic revenue guidance of 4-5% growth was below consensus.

- Hasbro's (HAS: +7.5%) share price growth was driven by strong results in its digital games and Wizards segments, as well as the announcement of a new $1 billion buyback program. The company's quarterly earnings came in well ahead of consensus, fully offsetting the company's cautious revenue expectations for the year.

This article was AI-translated and verified by a human editor