Critical information for the U.S. trading day

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It’s getting out of control. Even before Jerome Powell incorrectly told a MarketWatch colleague that financial conditions hadn’t changed very much, all manner of risky assets have stormed higher.

Bitcoin (BTCUSD), up 42% this year. The ARK Innovation ETF (ARKK), which in 2022 lost about two-thirds of its value, also up 42%. The Roundhill MEME ETF (MEME) has jumped 38%.

The Great Unwashed have noticed. Near the end of January, retail market orders as a percent of market value reached 23% on Jan. 23, according to data from JPMorgan. To put that in perspective, it got to 22% a few times when GameStop (GME) first started surging in value and everyone was talking about Roaring Kitting and Reddit Wall Street Bets.

Tesla (TSLA) was the most sold stock by retail investors, while Amazon and Apple were the most bought, according to JPMorgan analyst Peng Chang, using data up to Wednesday. (Oops? More on Amazon and Apple later.)

There also was strong demand for emerging market equities, gold, and credit ETFs. Thematically, Chang detected strong retail interest in areas including oil underperformers and labor intensive companies with poor sentiment, but selling of green/EV infrastructure and 5G broadband plays.

Chang doesn’t venture where all this is leading. Charlie McElligott of Nomura, who ahead of the Fed decision said it would be hard for Powell to meet “hawkish hike” expectations, lays it out.

“You’ve been greenlighted to re-risk,” when you add the Fed talk to the Bank of England and European Central Bank commentary this week that suggested there aren’t many rate hikes left, he said. “It sure looks like a coordinated ‘light at the end of the tunnel’ signaling…which is now turning this into an outright ‘asset allocation’ flow to simply reverse the damage of last year’s positioning.”

Michael Hartnett, chief investment strategist at Bank of America, says the plug is about to be pulled, noting first-quarter highs are likely before Valentine’s Day (which less romantically is also when the Labor Department releases the next consumer price index report), as he recommended investors fade the S&P 500 (SPX) above 4,200.

Speaking of meme-stocks, Nordstrom (JWN) shares shot up over 30% after The Wall Street Journal reported that activist investor, and GameStop chairman, Ryan Cohen has built up a big stake and is looking to shake up its board.

The market

U.S. stock futures (ES00) (NQ00) were slumping after three of the big tech giants reported. The yield on the 10-year Treasury (BX:TMUBMUSD10Y) was 3.39%.

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The buzz

Apple (AAPL) shares fell 3% in premarket trade as it didn’t meet earnings or revenue forecasts, with the company weighed down by iPhone production issues as well as a strong dollar.

Alphabet (GOOGL) dropped 4% as it also missed earnings and revenue guidance as a Google executive highlighted a pullback in spending by advertisers.

Amazon (AMZN) fell 6% as it did beat revenue expectations, but its chief financial officer said he expected slower growth rates in the new few quarters for AWS, its cloud division.

Outside of big tech, Starbucks (SBUX) and Ford Motor Co. (F) also dropped after their latest results. “Ford seems to find a way to dump a bucket of cold water on the auto stocks once the group begins to gain momentum,” lamented Michael Ward, an analyst at Benchmark.

Nonfarm payrolls data is due at 8:30 a.m. Eastern, with expectations of a further slowdown in hiring to 187,000, according to economists polled by The Wall Street Journal. The unemployment rate is forecast to tick up a tenth to 3.6%, while average hourly earnings are seen rising 0.3%.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, says the payrolls numbers today could be all over the place, owing to enormous seasonal adjustment factors, weather wildcards and the mixed messages from hiring and firing. He also said that there’s upside risk to the average hourly earnings, as over the past year the monthly numbers tend to move in rising four-month cycles.

Besides the payrolls numbers, the ISM services report also is due.

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Top tickers

Here were the most active tickers on MarketWatch as of 6 a.m. Eastern.

The chart

According to UBS, traffic to ChatGPT is scaling to 100 million monthly active users faster than TikTok. “In twenty years following the Internet space, we cannot recall a faster ramp in a consumer internet app. It took TikTok ~9 months after its global launch to add 100M incremental users and it took Instagram ~2.5 years,” said analysts led by Lloyd Walmsley.

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