Market Wrap: Stock Market Ends Mixed as Mega Cap Surge Offsets Earnings Weakness

The stock market closed with a mixed performance on February 6, as investors showed little conviction for much of the session before a late-session rally in mega cap stocks helped push the major indices toward their highs. While the S&P 500 and Nasdaq Composite managed to finish with modest gains, overall market breadth remained negative, reflecting a divided investor sentiment.

With no single catalyst driving the late-afternoon buying, it appears the market was buoyed by a combination of short-covering and the continued inclination to buy on weakness.

Apple, which had been down as much as 0.9 percent earlier in the day, reversed to close with a 0.3 percent gain, helping to stabilize the broader market. However, despite the positive turn in some large-cap names, market breadth showed more decliners than advancers at both the NYSE and Nasdaq.

Earnings Reports Drive Notable Stock Moves

Earnings season continued to dictate much of the session’s biggest stock movements. Qualcomm’s post-earnings decline of 3.7 percent sparked broader selling in semiconductor-related names, while Ford Motor and Skyworks Solutions suffered significant losses, with both hitting new 52-week lows. Ford dropped 7.5 percent, while Skyworks plunged 24.7 percent following its earnings report.

On the upside, several consumer stocks rallied following their quarterly results. Tapestry climbed 12.0 percent, Ralph Lauren surged 9.7 percent, and Philip Morris jumped 11.0 percent, all reaching 52-week highs. Hershey also gained 4.4 percent, continuing its recovery from multi-year lows.

Bond Market and Interest Rate Movements

In the bond market, yields inched higher, with the 10-year Treasury yield rising two basis points to settle at 4.44 percent and the 2-year yield increasing by three basis points to 4.21 percent. These movements suggest a cautious sentiment among fixed-income investors, as traders weighed the latest economic data and anticipated upcoming labor market reports.

Economic Data Indicates Productivity Gains, Stable Job Market

The economic data released during the session provided a mix of positive and neutral signals.

Fourth-quarter preliminary productivity growth came in at 1.2 percent, above the consensus estimate of 0.8 percent. This data suggests that the economy continues to experience improvements in efficiency, which could help moderate inflationary pressures over time.

Since the onset of the current business cycle in late 2019, annualized productivity growth has averaged 1.8 percent, an improvement over the 1.5 percent pace observed in the previous cycle.

Meanwhile, unit labor costs increased by 3.0 percent in the fourth quarter, slightly exceeding expectations of 2.6 percent. Rising labor costs could pose inflationary risks, but they remain within a range that the Federal Reserve is likely monitoring without immediate concern.

The weekly jobless claims report showed initial claims at 219,000, slightly above the consensus forecast of 213,000. Continuing claims rose to 1.886 million from a revised 1.850 million, suggesting a slight increase in the number of individuals remaining on unemployment benefits.

However, the data did not indicate a material deterioration in the labor market. Layoff activity remains subdued, implying that while hiring may have slowed, employers are not yet signaling concerns about an economic downturn.

Key Data Releases Ahead

Investors are now turning their attention to Friday’s key labor market data, which will offer further insights into the strength of employment trends. The January nonfarm payrolls report is expected to show job growth of 155,000, down from December’s 256,000 gain. Nonfarm private payrolls are projected to increase by 163,000, while the unemployment rate is forecast to remain at 4.1 percent.

Average hourly earnings, a key measure of wage inflation, are expected to rise by 0.3 percent month-over-month, matching the previous reading. Additionally, the average workweek is forecast to hold steady at 34.3 hours.

Other notable economic reports on Friday include the preliminary University of Michigan Consumer Sentiment Index for February, which is expected to edge up slightly to 71.3 from 71.1, and December’s wholesale inventories data, which is projected to decline by 0.5 percent.

Market Outlook and Investor Sentiment

While the late-session rally in mega cap stocks helped the S&P 500 and Nasdaq Composite recover from early losses, overall sentiment remains mixed. The presence of weak earnings reports and disappointing guidance from select companies, including Ford and Skyworks, weighed on certain sectors, even as consumer and retail names found renewed strength.

Looking ahead, the market’s next major test will come from the upcoming payrolls report. If job growth shows significant weakness, it could increase expectations for Federal Reserve rate cuts later in the year. Conversely, if hiring remains robust and wage growth accelerates, the Fed may maintain a more cautious approach, potentially keeping rates higher for longer.

As it stands, the major indices are off to a solid start in 2025, with the Dow Jones Industrial Average up 5.2 percent year-to-date, the S&P 500 rising 3.4 percent, and the Nasdaq Composite gaining 2.5 percent.

However, with economic uncertainty and earnings volatility still influencing investor behavior, market participants will remain focused on incoming data to determine whether the current rally can sustain its momentum or if a period of consolidation is ahead.