feb 4  welcome to the home for realtime coverage of markets brought to you by reuters reporters you can share your thoughts with us at marketsresearchthomsonreuterscom after a week rocked by a dismal forecast from meta platforms fbo fourthquarter results appear to be in from most of the sp 500 mega cap companies mixed in with some big misses from banks and other major companies there have been some upbeat reports including thursdays blowout quarterly results from amazoncom  as such estimated profit growth has gone up since the start of the reporting period based on results from 278 companies and forecasts for the rest sp 500 earnings for the fourth quarter are now estimated to have increased 272 up from the 223 forecast at the start of january according to ibes data from refinitiv of those companies that have reported 784 have beaten consensus up from 77 just a few days ago according to refinitiv data the percentage of individual investors with a pessimistic outlook on the us stock market remained unusually high and optimism was still unusually low in the latest american association of individual investors sentiment survey aaii with this neutral sentiment increased aaii reported that bearish sentiment or expectations that stock prices will fall over the next six months fell by 93 percentage points to 437 this is bearish sentiments 11th straight week above its historical average of 305 and its third consecutive week at an unusually high level bullish sentiment or expectations that stock prices will rise over the next six months rose by 34 percentage points to 265 nevertheless optimism remains well below its historical average of 380 bullish sentiment levels are also unusually low for the fourth straight week this is the first time this has happened since the fourweek period from june 17 to july 8 2020 neutral sentiment or expectations that stock prices will stay essentially unchanged over the next six months jumped by 59 percentage points to 299 the historical average is 315 aaii noted that the sp 500 index has gone on to realize aboveaverage and abovemedian returns during the six and 12month periods following an unusually low reading for bullish sentiment sixmonth returns in the wake of an unusually high bearish sentiment reading have also tended to be aboveaverage and abovemedian with these changes the bullbear spread rose to 1720 from 298 last week read more  time to go big in small cap space 1250 est1750 gmt with key small cap indexes down sharply from their alltime highs some market watchers are reminding investors not to ignore the space with increased market volatility and rising inflation small caps are attractive to many investors according to joel rubenstein senior portfolio manager for efg new capital in a recent note he says small caps have outperformed inflation in every decade on record the russell 2000 index rut is down about 18 from its nov 8 closing record high after recently confirming it was in a bear market by falling more than 20 from that november peak others note that investors should focus in particular on smallcap value shares conditions are ideal for smallcap value to experience a prolonged period of outperformance michael petro portfolio manager of the putnam small cap value fund wrote in a recent report small caps should benefit as the economy rebounds from the depths of the pandemic and growth broadens beyond select workfromhome technology beneficiaries he said a resurging economy combined with higher inflation could bring doubledigit nominal growth rates to a wider swath of the investing universe this should make reasonable growth less scarce and attract investors to the longneglected smallcap value space he wrote steve lipper senior investment strategist at royce investment partners in a note said he believes that smallcap value should continue to outperform smallcap growth as measured by the russell 2000 value and growth indexes the russell 2000 value index rlv is down just 23 for the year to date while the russell 2000 growth index rlg is down about 102 over that same period thats five straight weeks of losses for europe 1202 est1702 gmt the stoxx 600 stoxx has closed on a weekly loss of 07 its fifth straight week of losses in other words the paneuropean index has never so far in 2022 made it to the weekend with some gains in its pocket five red weeks in a row is a pretty rare occurrence which only last happened during the march 2020 covid19 market crash another worrying fact is the 68 decline by the stoxx 600 since its jan 4 record high of 49546 points its not a correction yet but its getting dangerously close tensions over ukraine the uncertainty surrounding tech and the new global monetary tightening cycle make the direction of travel uncertain even if analysts are still revising their expectations upwards for the ongoing earnings season european equity markets have been happily coexisting with negative yields on benchmark euro zone government bonds for years now but the european central banks pivot moment on thursday probably marks the end of that era this session saw the yield of germanys bund reach 029 a first since january 2019 and the countrys fiveyear bond yields turned positive for the first time since 2018 with money market investors already rushing in to price several ecb rate hikes in 2022  something president christine lagarde said was unlikely only until recently  equity traders may also soon work out how that impacts their equity risk premium models well probably find out soon the strong labor market report on friday was a boost for anyone worried about the strength of the us economy but it keeps the fed on a tightrope with the first hurdle whether to hike interest rates by 25 or 50 basis points in march economists and market participants said the upward revisions in the labor report put the jobs trend more in line with how they had seen the economy before the omicron variant led so many workers to call in sick and cloud the jobs picture the strong data highlights the federal reserves gradualist approach to policy and will bring back talk of a 50 bps hike in march said david petrosinelli senior trader at insperex its disturbing that the fed is still buying bonds and hasnt raised rates yet petrosinelli told reuters does this is increase the probability of a 50 basis points in march you bet it does i dont think were going to get that because i think this fed has locked themselves in to a gradualist regime and a gradualist approach concerns that the fed will be forced to act more urgently could come back to the fore and be a headwind for equities said matt peron director of research at janus henderson investors the labor report was especially strong in reopening sectors and together with wage gains continues to spur the inflationary wall of worry he said our fears that the first half of 2022 would be choppy for markets are still holding and we are not out of the woods yet peron said morgan stanley said a fed in tightening mode historically brings lower returns and great uncertainty for equities we remain sellers of rallies and of the view that sp 500 fair value remains closer to 4000 tactically the banks research team said the 4000 level represents more than a 10 decline from the benchmarks close on thursday the data made it clear that the labor market before omicron was much stronger than previously believed said ian shepherdson chief economist at pantheon macroeconomics its very tempting to argue that the january data mean that all danger of an omicron hit has passed he said were a bit more cautious shepherdson noted that the yearoveryear wage growth jumped to 57 but the threemonthonpreviousthreemonth annualized rate rose to a startling 77 no matter how bullish you are about productivity growth the fed cant live with that pace shepherdson said the report showed a jump in the labor participation rate to 622 a surprise because omicron was believed to have put a crunch on people seeking work people are more willing to seek work which should improve the overall labor market landscape if it continues and ease inflationary pressures said russell price chief economist at ameriprise financial services inc in troy michigan the wage increases that weve seen are having the positive effect of drawing more people back into the job market price said adding that it would alleviate some of the upward pressure on inflation the results also suggest that businesses have been more willing to hold on to as many seasonal workers as they could as a means of overcoming ongoing labor market tightness he said us stocks mixed as jobs data stirs the pot 1009 est1509 gmt major us indexes are mixed in early trade on friday this as a boost from amazoncoms results is helping to counter an unexpected jump in us growth in january which is fanning inflation fears the us 10year treasury yield has thrust above 190 and is on the verge of its highest weekly close since december 2019 with this the nasdaq ixic is rising nearly 1 while the sp 500 spx is slightly green the dow dji is down slightly of note however both the spx and the dji are attempting to use their 200day moving averages dma as support here is the sp 500s daily chart the spx hit a low of 446463 and the dji fell to 3496882 before bouncing their closely watched longerterm moving averages now reside around 4444 and 35000 the nasdaq is well below its 200dma which is at 14735 here is where markets stand in early trade us futures pressured after above estimates payrolls print 0900 est1400 gmt us equity index futures are under pressure after the headline jobs number in the january payrolls report came in well above estimates and the december number was revised sharply higher with this wage data came in on the hot side vs estimates  nasdaq 100 futures  which were up more than 2 in overnight trade with a boost from amazoncoms results  are now off around 05 sp 500 futures and dow futures are also posting modest declines of around 05 meanwhile the us 10year treasury yield is pushing over 190 and is hitting fresh highs going back to january 2020 regarding the jobs data sam stovall chief investment strategist at cfra research said with the payroll numbers coming substantially stronger than expected it will help relieve some economic growth worries at a time the fed is ready to tap the break stovall added this definitely would relieve investor worries that a 25 or 50 basis point rate hike in march would be adverse for economic growth and it gives the fed a reason to start the rate hike cycle at a 50bps hike and leaves on the table a possibility of four or more rate hikes here is your premarket snapshot for fridays live markets posts prior to 0900 est1400 gmt  click here read more terence gabriel is a reuters market analyst the views expressed are his own