Stocks lost momentum and turned lower during afternoon trading on Friday, as investors retreated slightly after a strong rally led by major technology names. The February jobs report also showed a slight rise in the unemployment rate, boosting investor confidence that the Federal Reserve will cut interest rates after its June meeting.
The S&P 500 (^GSPC) trended near the flat line after posting another record close on Thursday, while the Dow Jones Industrial Average (^DJI) rose nearly 0.3%. The Nasdaq Composite (^IXIC) lost 0.3% after sharp gains the previous day.
Friday's nonfarm payrolls report showed the U.S. economy added 275,000 jobs in February, again beating Wall Street expectations. However, the unemployment rate rose to 3.9%, its first increase in four months. Futures on the three major averages were trading in the red numbers ahead of the jobs data.
The market received a boost this week as Chairman Jerome Powell told lawmakers that the Federal Reserve is “not far from” confident that inflation is in the right place for the central bank to start lowering borrowing costs.
And in a show of how the wind is blowing elsewhere, policymakers from the European Central Bank lined up to support interest rate cuts ahead of the summer break as inflation falls faster than expected. Meanwhile, Bank of Japan officials are said to welcome the idea of finally raising interest rates out of negative territory.
On the corporate front, Costco ( COST ) shares fell 7% after its quarterly sales overshadowed the earnings beat. Broadcom ( AVGO ) revenue beat and expectations of $10 billion in sales of AI-related chips failed to impress investors, sending the stock down more than 6%.
In commodities, gold futures (GC=F) continued to rise, with spot gold seeing its biggest weekly jump in five months amid optimism about a mid-year Fed rate cut.
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Costco is Costco
Costco (COST) being a Costco has historically worked very well for investors.
The company sells giant $1.50 hot dogs in its food court (they taste great, as you can see below in my 2022 photo with retiring CEO Craig Jelinek). Last quarter, an 18% increase in online sales was driven by demand for gold bullion. Surprisingly, I found (and bought) two tomahawk steaks from my local Costco a few weeks ago for $40 (about five pounds of meat).
Costco does things differently, and it's part of their DNA. The stock has risen in the past five years because members are happy to shop there: +245%.
So I wasn't surprised when I heard Costco CFO Richard Galanti (soon-to-retire) reveal his foray into the sushi business on an earnings call last night:
“We recently opened our first fully-operated sushi counter in Issaquah, Washington, across the street from our headquarters, and two more are scheduled to open in the very near future. This operation is what we have done successfully for years — for many years — and throughout Costco Asia And many countries there. The sushi program has proven to be a category where we can succeed in terms of quality and price, and we look forward to seeing more of that in the future.”
Sign me up for the California concert, Rich.
Costco hot dogs are on point. On the right, now-retired Costco CEO Craig Jelinek. (Yahoo Finance)
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