Dear Readers,

U.S. markets are positive to start the day and are on pace to close higher for the week. It's been another heavy week of earnings reports and heavy trading volumes. The new year brought new jobs for 49,000 workers, and Peloton disappoints shareholders despite its strong quarterly sales growth.

We hope you have a great weekend, and enjoy the Super Bowl if you plan on watching. May the best team win!

1/ CHART OF THE DAY

January's Tepid Recovery

The U.S. economy added 49,000 jobs to the labor market in January in another sign that the economic recovery is still tepid as the nation continues to fight the impact of the coronavirus pandemic. January’s gains came after steep losses in December due to the resurgence of the virus, but most of the hiring last month was in temporary professional services.

The number of people unemployed decreased to 10.1 million during the first month of the new year, and the unemployment rate fell to 6.3%, from 6.7% previously, the Department of Labor reported. Although both measures are significantly lower than their April 2020 highs, they are still above pre-pandemic levels when there were 5.7 million unemployed and an unemployment rate of 3.5% in Feb. 2020.

Notable job gains in professional and business services and education were offset by losses in leisure and hospitality, retail trade, health care, and transportation and warehousing. Employment in leisure and hospitality declined by 61,000, following a steep decline (-536,000) in December.

This is the first unemployment report since President Joe Biden took office and comes as he advocates for a $1.9 trillion stimulus package that will provide Americans with $1,400 stimulus payments and $400 of weekly unemployment benefits.

2/ STOCK OF THE DAY

Peloton Interactive Inc (PTON)

Image courtesy Getty Images/Ezra Shaw/Staff

Shares in Peloton (PTON) tumbled more than 6% in extended trading Thursday and continued to fall nearly 9% at 11 a.m. ET Friday after the company reported fiscal second-quarter earnings.

Even though the company reported a strong quarter that beat analyst expectations, shareholders were unhappy with the company's hurdles regarding shipping items to customers quickly amid the high demand for at-home fitness equipment. Peloton warned that near-term investments in its supply chain to speed deliveries will cut into margins.

Nonetheless, the cycle maker said the demand surge for its equipment boosted sales, with quarterly growth of 128% that marked its first billion-dollar quarter. Peloton reported revenue of $1.06 billion, above the $1.03 billion expected, and earnings per share of 18 cents versus the 9 cents expected.

[Editors Note: Our stock of the day is by no means a recommendation to buy, sell, or hold a particular security or asset. We will never do that. It's simply a vehicle for us to present a security with interesting price movement and try to analyze what's driving it.]

3/ TODAY IN HISTORY

Feb. 5, 1637

Image courtesy Walters Art Museum

On this day in 1637, “Tulipmania” hit its peak in the Netherlands, with the price of the rare Witte Croonen tulip bulb reaching 1,345 guilders per half-pound, up 2,506% in 33 days. Over the next five years, the bulbs lost an annual average of 76% of their value, until they fetched only 37.5 guilders in 1641.

Source: Peter M. Garber, "Who Put the Mania in the Tulipmania?" in Eugene N. White, ed., Crashes and Panics: Lessons from History (DowJones Irwin, Homewood, IL, 1990), p. 12.

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4/ WORD OF THE DAY

Hedge Fund

Hedge funds are alternative investments using pooled funds that employ different strategies to earn active returns, or alpha, for their investors. Hedge funds may be aggressively managed or make use of derivatives and leverage in both domestic and international markets with the goal of generating high returns (either in an absolute sense or over a specified market benchmark).

Several hedge funds raked in cash during the GameStop rally, despite retail investors' efforts to punish the funds for their evil, short-selling ways. Senvest’s stock-picking fund made nearly $700 million (they got out of GameStop on Jan. 26), while Mudrick Capital Management, a funder of movie chain AMC Entertainment, another Reddit weapon, made almost $200 million in January, largely on AMC stock.

PODCAST

This Week on The Investopedia Express

Will the day trading frenzy threaten the overall stock market or has it just changed the dynamics between individual and institutional investors? LPL Financial’s Ryan Detrick joins the show to put the recent events into context. Plus, this is not the first retail trader takeover in history, and it won’t be the last. Jamie Catherwood is back on the show with recent examples from history.

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