Stocks pull back after February jobs report
Stocks lost momentum and turned downward during afternoon trading on Friday, as investors pulled back some after a powerful rally that led by big tech names. The February jobs report also showed an uptick in the unemployment rate, bolstering investor confidence that the Federal Reserve will cut rates following its June meeting.
The S&P 500 (^GSPC) trended near the flatline after logging another record close on Thursday, while the Dow Jones Industrial Average (^DJI) increased by close to 0.3%. The tech-heavy Nasdaq Composite (^IXIC) lost 0.3% after a sharp gain the previous day.
Friday’s non-farm payrolls report showed the US economy added 275,000 jobs in February, once again zooming past Wall Street expectations. However, the unemployment rate ticked up to 3.9%, its first increase in four months. Futures on the three major averages were trading in red figures ahead of the jobs data.
The market received a boost this week as Chair Jerome Powell told lawmakers that the Federal Reserve is “not far” from being confident inflation is in the right place for the central bank to start bringing down borrowing costs.
Showing how the wind is blowing elsewhere, policymakers from the European Central Bank lined up to support a rate cut before their summer break as inflation falls faster than expected. Meanwhile, Bank of Japan officials are said to be warming to the idea of finally lifting rates out of the negative zone.
On the corporate front, Costco (COST) shares fell 7% after its quarterly sales miss overshadowed an earnings beat. Broadcom’s (AVGO) revenue beat and forecast for $10 billion in sales of AI-linked chips failed to impress investors, sending the stock over 6% lower.
In commodities, gold futures (GC=F) continued to rally, as spot gold eyed its biggest weekly jump in five months amid optimism for a mid-year Fed rate cut.
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Costco being Costco
Costco (COST) being Costco has historically worked very well for investors.
The company sells giant $1.50 hot dogs at its foodcourt (they taste great, as you can see below in my 2022 photo with retired CEO Craig Jelinek). In the most recent quarter, an 18% online sales increase was fueled by gold bar demand. I surprisingly found (and bought) two tomahawk steaks from my local Costco a few weeks ago for $40 (about five pounds of meat).
Costco just does things differently, and it’s built into its DNA. The stock has risen in the last five years because members are happy shopping there: +245%.
So I wasn’t surprised to hear Costco’s longtime CFO Richard Galanti (who is retiring soon) reveal it’s getting into the sushi business on last night’s earnings call:
“We recently opened our first fully operated sushi offering in Issaquah, Washington, across the street from our headquarters, with two more planned to open in the very near future. This operation is what we have successfully done for years — for many years — and throughout our Asia Costcos and several countries over there. The sushi program has proven to be a category where we can be successful in both quality and price, and we’re looking forward to seeing more of that in the future.”
Sign me up for a California roll, Rich.
The Costco hot dog is on point. At right, now retired Costco CEO Craig Jelinek. (Yahoo Finance)
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