Feb 2 (Reuters) - The tech-laden Nasdaq and the benchmark S&P 500 rose on Friday as investors cheered robust quarterly reports from Meta Platforms and Amazon.com, while a strong jobs report kept the upbeat sentiment in check.
U.S. job growth accelerated in January and wages increased by the most in nearly two years, signs of persistent strength in the labor market that could make it difficult for the Federal Reserve to start cutting interest rates in May as currently envisaged by financial markets.
"The strong jobs report indicates that demand in the labor market is higher than expected," said Richard Flynn, managing director at Charles Schwab UK.
"While lower interest rates would surely be welcomed, it is becoming increasingly clear that markets and the economy are coping well with the high rate environment, so investors are perhaps feeling that the need for monetary policy to ease is less urgent."
Boosting sentiment, Meta (META.O), opens new tab surged 20.0% to hit a record high and aided a 3.7% surge in the S&P 500 communication services sector (.SPLRCL), opens new tab after issuing its first dividend days ahead of Facebook's 20th anniversary, along with a revenue and profit beat on robust advertising sales in the holiday shopping period.
Other social media firms Snap (SNAP.N), opens new tab and Pinterest (PINS.N), opens new tab rose 4.5% and 2.5%, respectively.
Amazon.com (AMZN.O), opens new tab jumped 6.9% following a fourth-quarter revenue beat as new generative AI features in cloud and ecommerce businesses spurred robust growth during the critical holiday period.
Weighing on the blue-chip Dow, Apple (AAPL.O), opens new tab lost 1.6% after forecasting a drop in iPhone sales and targeting overall revenue $6 billion below expectations, as its China business took a hit.
Earnings from the tech trio, part of the group of megacap stocks popularly called the "Magnificent 7", likely offset some concerns over their rich valuations and outsized weighting in the S&P 500, after Alphabet (GOOGL.O), opens new tab and Microsoft's (MSFT.O), opens new tab disappointing AI cost projections and Tesla's (TSLA.O), opens new tab growth warning.
In the previous session, Wall Street rebounded from a sell-off on Wednesday after the Federal Reserve quashed lingering bets that interest-rate cuts could begin as early as March
Meanwhile, the KBW Regional Banking index (.KRX), opens new tab lost 0.5% hauled by a 5.2% plunge in New York Community Bancorp (NYCB.N), opens new tab, its third-day in losses following disappointing earnings that sparked worries on the lenders' exposure to the troubled commercial real estate sector.
The real estate sector (.SPLRCR), opens new tab led sectoral declines with a 2.8% fall, while the Russell 2000 small-caps index (.RUT), opens new tab declined 1.5%.
At 10:17 a.m. ET, the Dow Jones Industrial Average (.DJI), opens new tab was down 118.68 points, or 0.31%, at 38,401.16, the S&P 500 (.SPX), opens new tab was up 16.95 points, or 0.35%, at 4,923.14, and the Nasdaq Composite (.IXIC), opens new tab was up 130.37 points, or 0.85%, at 15,492.01.
Further on the earnings front, Cigna (CI.N), opens new tab rose 5.4% as the health insurer raised its annual profit forecast after lower-than-expected medical costs and strong demand in its pharmacy benefit management unit helped it beat fourth-quarter profit estimates.
Bristol Myers Squibb (BMY.N), opens new tab posted upbeat results for the fourth quarter, sending the drugmaker's shares up 0.6%.
Chipmaker Microchip Technology (MCHP.O), opens new tab dropped 1.7% after forecasting fourth-quarter net sales below estimates, while footwear maker Skechers U.S.A (SKX.N), opens new tab lost 8.4% after a downbeat 2024 forecast.
Declining issues outnumbered advancers for a 4.42-to-1 ratio on the NYSE and for a 2.68-to-1 ratio on the Nasdaq.
The S&P index recorded 39 new 52-week highs and three new lows, while the Nasdaq recorded 41 new highs and 86 new lows.
Reporting by Ankika Biswas and Johann M Cherian in Bengaluru; Additional Reporting by Shubham Batra; Editing by Maju Samue
