Two of the three major indexes closed higher on the final trading day of a volatile week thanks to a pair of well-received earnings and economic reports.
On the earnings front, Amazon.com (AMZN) surged 13.5% after the company last night reported top- and bottom-line beats. Strong year-over-year growth in Amazon Web Services and the company's investment in electric vehicle maker Rivian (RIVN) helped drive the better-than-expected results. AMZN also hiked the price of an Amazon Prime annual membership by 17%.
Amazon earnings shared the spotlight with the Labor Department's latest jobs report, which showed the U.S. added 467,000 new positions in January – much higher than the 150,000 gain expected by economists.
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"Fortunately, this jobs report exceeded expectations, suggesting that there has been some economic recovery following a poor performance in December," says Steve Rick, chief economist at Wisconsin-based financial services firm CUNA Mutual Group.
The report likely cements the Fed's plans to raise rates and end quantitative easing in the coming months, Rick adds.
At the close, the Nasdaq Composite was up 1.6% at 14,098 and the S&P 500 Index was 0.5% higher at 4,500. However, the Dow Jones Industrial Average turned lower in the final minutes of trading to end down 0.06% at 35,089.
Other news in the stock market today:
- The small-cap Russell 2000 added 0.6% to end at 2,002.
- U.S. crude oil futures climbed 2.3% to settle at $92.31 per barrel.
- Gold futures gained 0.2% to finish at $1,807.80 an ounce.
- Bitcoin shot up 11.6% to $40,567.40. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
- Ford Motor (F) fell 9.7% after the automaker reported adjusted earnings of 26 cents per share on $35.3 billion in revenue for its fourth quarter. The results fell short of analysts' consensus estimates for earnings of 45 cents per share and revenue of $35.3 billion. Still, BofA Securities analyst John Murphy reiterated his Buy rating on F. "Despite the tough finish to 2021, the 2022 financial outlook is strong, and we believe that under its Ford+ strategy outlined at its Capital Markets Day in 2021," Murphy says. "Simply, Ford is on the verge of executing something analogous to our Core to Future framework, by which it will strengthen its core business pillars to fund its future business. And despite the tough macroeconomic backdrop, we continue to believe Ford is just starting to hit a more sustainable inflection in earnings, driven by the combination of a favorable product cadence in the critical US/NA market; redesign efforts; and a real push into electrification, autonomy, connectivity, and other future businesses."
- Clorox (CLX) was another post-earnings loser, plunging 14.5%. In its fiscal second quarter, the Pine-Sol parent reported adjusted earnings of 66 cents per share on $1.69 billion in revenue, compared to analysts' calls for earnings per share of 84 cents on $1.66 billion in sales. Additionally, gross margin declined to 33% from 45% in the year-ago period. Clorox also forecast declining net sales and gross margin for its full fiscal year, citing higher-than-anticipated manufacturing, commodity and logistics costs. "CLX is 1) carrying elevated inventory, which is being recorded at a much higher cost; 2) isn't increasing prices at fast as we anticipated (likely because of market share losses last year); 3) is experiencing negative mix from the reintroduction of multi-pack products; and 4) continues to experience high input and transportation costs," says CFRA Research analyst Arun Sundaram. "Overall, we think CLX is facing some structural issues that could take a while to resolve." The analyst cut his rating on Clorox to Hold from Buy.
The "Sweet Spot" for Stocks
Mid-cap stocks were another winner in today's market, gaining 0.2% on the day and 1.7% on the week.
This group of equities (typically companies with market caps between $2 billion to $10 billion) are often overlooked by investors, who instead seek out large-cap names for stability or small-cap stocks for growth potential.
But mid-cap stocks can offer investors the best of both worlds – better growth prospects than their large-cap peers, and less volatility than smaller cap bets. Additionally, mid-cap stocks have historically provided a better risk/return profile for investors, according to Canadian fund provider Mackenzie Financial.
Here, we've compiled 15 of the best mid-cap stocks to buy for 2022. The names span a number of sectors, including technology, industrials and healthcare, but they all share one thing in common: top recommendations from Wall Street pros.
Karee Venema was long F as of this writing.
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