A US$244 billion exchange-traded fund tracking the Nasdaq 100 climbed in late hours after Amazon.com Inc. and Meta Platforms Inc.’s results.

Amazon extended gains after reporting strong profit and giving an operating income outlook that surpassed estimates. Meta climbed on a bullish revenue forecast, plans to buy back $50 billion in shares and pay its first-ever quarterly dividend of 50 cents.

In regular hours, stocks rebounded as Wall Street geared up for Friday’s jobs report. Traders also kept an eye on regional banks as New York Community Bancorp slid again, while Citizens Financial Group Inc.’s chief said the issues leading the collapse of some lenders last year are largely in the past. Oil fell as Bloomberg News reported negotiations are advancing for a deal to pause the Israel-Hamas war and free civilian hostages.

In the run-up to the U.S. government’s jobs figures, a report showed unemployment claims unexpectedly rose to a two-month high. Economists surveyed by Bloomberg forecast payrolls rose by about 185,000 in January following a December gain of 216,000. Separate data showed labor productivity advanced at a rapid pace while measure of U.S. factory activity climbed to the highest in 15 months.

“Attention will turn to U.S. job data,” said Fawad Razaqzada at City Index and Forex.com. “Still, traders are not letting go of the possibility of an earlier-than-expected rate cut. Those expectations could rise further if incoming U.S. data from now on takes a bearish turn.”

The S&P 500 added over 1 per cent, following its biggest drop on a Fed day since last March. U.S. 10-year yields fell six basis points to 3.86 per cent. The British pound rose after the Bank of England warned that price pressures could reemerge.

A survey conducted by 22V Research showed 50 per cent of respondents believe employment data on Friday will be “risk-off,” 33 per cent expect a “risk-on” reaction and 17 per cent see it being mixed or negligible.

Economists are taking Powell’s words to heart and erasing the last of their forecasts for a March rate cut as they set their sights on May.

Goldman Sachs Group Inc., Bank of America Corp. and Barclays Plc — among the last Wall Street holdouts expecting the Fed to start lowering their benchmark rate as soon as March — have pushed back their forecasts for cuts after the conclusion of the central bank’s policy meeting Wednesday.

Swap contracts that predict the outcome of future Fed meetings are priced for about 150 basis points of easing this year, with the first move fully priced in for May. 

Meantime, institutional investors sold the most U.S. equities for a single week in almost a decade — even as the S&P 500 hovered near all-time highs, according to Bank of America Corp. strategists led by Jill Carey Hall.

Last week, mutual funds, pension funds, insurance companies and banks offloaded the most equities since 2015, BofA said. The outflows came as the benchmark climbed 1.1 per cent, with seven out of 11 sectors posting positive returns. The cohort diverged from private clients and hedge funds, which were net buyers of stocks and exchange-traded funds for the period.

If the U.S. stock market goes down a little from here, it “could go down a lot.” That’s the view of Goldman Sachs Group Inc. tactical specialist Scott Rubner, who warned in a note to clients on Thursday that the “pain trade is now lower, not higher from here.”

“We have all-time high problems for the U.S. equity market and the bar is simply too high in February,” Rubner wrote, pointing to elevated leverage levels, stretched positioning in futures and a drop in liquidity.

Investors should buy high-quality growth stocks, and opportunities go far beyond the megacap tech companies that propelled equities higher in 2023, according to Morgan Stanley’s Mike Wilson.

“We don’t think the trade is to go to the lower quality bucket,” Wilson told Bloomberg Television on Thursday. “That is a recession trade. We’re not in a recession.”

And a record boom in U.S. investment-grade bond sales is set to spill into February as a comeback in corporate acquisitions meets insatiable investor demand for new debt. 

BofA expects companies to sell $160 billion to $170 billion of high-grade bonds this month, the most for any February on record. That would pile atop January’s nearly $190 billion deluge of fresh notes, especially as major firms line up for financing after posting their latest earnings.

Corporate Highlights:

Qualcomm Inc., the world’s biggest seller of smartphone processors, is expecting a modest recovery for the industry in 2024, with phone shipments getting stronger but the market for internet-connected appliances remaining sluggish.

Peloton Interactive Inc. said it expects another sales decline in the current quarter, defying Wall Street predictions for a return to growth.

Wall Street banks including JPMorgan Chase & Co. and Bank of America Corp. are in talks to provide as much as $8 billion in financing for a buyout of DocuSign Inc. that values the company at around $13 billion, according to people with knowledge of the matter.

The combative chief executive officer of Cleveland-Cliffs Inc. who lambasted United States Steel Corp.’s decision to sell itself to a Japanese steelmaker said his company’s offer is off the table.

Royal Caribbean Cruises Ltd.’s gave initial profit guidance that was well ahead of expectations amid record demand.

Merck & Co. forecast annual profit ahead of Wall Street views as sales of its cancer blockbuster Keytruda remained strong ahead of a looming patent expiration.

Shell Plc kept up the pace of its share buybacks after a strong performance from its gas traders offset the impact of lower commodity prices in the fourth quarter.

Some of the main moves in markets:

Stocks

The S&P 500 rose 1.3 per cent as of 4 p.m. New York time

The Nasdaq 100 rose 1.2 per cent

The Dow Jones Industrial Average rose 1 per cent

 The MSCI World index rose 0.7 per cent

Currencies

The Bloomberg Dollar Spot Index fell 0.5 per cent

The euro rose 0.5 per cent to $1.0871

The British pound rose 0.5 per cent to $1.2746

The Japanese yen rose 0.4 per cent to 146.34 per dollar

Cryptocurrencies

Bitcoin rose 1.3 per cent to $42,994.41

Ether rose 0.9 per cent to $2,298.26

Bonds

The yield on 10-year Treasuries declined six basis points to 3.86 per cent

Germany’s 10-year yield declined two basis points to 2.15 per cent

Britain’s 10-year yield declined five basis points to 3.75 per cent

Commodities

West Texas Intermediate crude fell 2.7 per cent to $73.82 a barrel

Spot gold rose 0.8 per cent to $2,055.20 an ounce