Will The February Employment Report Support The Current Market Narrative?

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The moment the market has been waiting for is upon us this morning - the February Employment Report. Despite the sequentially stronger jobs creation figure found in this week’s  February ADP Employment Change report that also showed an uptick in wages for job changers, the expectation is for a sharp drop in non-farm payroll gains in the February Employment Report (200,000 vs. 353,000 in January) and a slightly slower gain in average hourly earnings of 4.4% vs. 4.5% the month before. 

In the recent past, stronger-than-expected figures would have facilitated a market sell-off, but the market narrative has changed, especially with Fed Chair Powell making rate cuts a “when” not “if” for 2024. Granted the start may be later than the market or its watchers are thinking, but should the February Employment Report support an expanding economy with more people working and real wage growth continuing, that would be just fine by the market and a growing number of investors. 

  • Taiwan Semiconductor (TSM) announced its revenue for February was ~NT$181.65 billion, a decrease of 15.8% from January 2024 but on a YoY basis rose 11.3%.

  • Shares of Broadcom (AVGO) slipped in aftermarket trading last night as the market looked past its January quarter beat, focusing instead on its outlook for 2024. Despite strength in its business, including "Strong demand for our networking products in AI data centers, as well as custom AI accelerators from hyperscalers, are driving growth in our semiconductor segment", Broadcom’s revenue forecast of $50.0 billion, essentially matched the $50.2 billion consensus forecast. Following the 75% move in AVGO shares, the market was expecting the company’s guidance to surprise to the upside, rather than just meet expectations.

  • Following strong January quarter results, shares of Marvell Technology (MRVL) shares are down in premarket trading following the company’s disappointing April quarter outlook. AI was a factor in the company’s January quarter, driving strong growth in Marvell’s data center end market revenue which increased 38% sequentially and 54% year-over-year. Marvell expects revenue for the quarter to be around $1.092-1.208 billion vs. the $1.38 billion consensus with EPS between $0.18-$0.28, well below the $0.41 market forecast. However, management shared that while it is forecasting soft demand impacting its consumer, carrier infrastructure, and enterprise networking segments in the near term, it expects those revenue declines to be behind it after the April quarter and projects a recovery in the second half of the fiscal year.

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