The major U.S. index futures are currently pointing to a sharply higher open on Friday, with stocks likely to extend the rally seen over the course of the previous session.

The futures surged to new highs following the release of a closely watched Labor Department showing employment in the U.S. increased by much less than expected in the month of April.

The Labor Department said non-farm payroll employment climbed by 175,000 jobs in April after surging by an upwardly revised 315,000 jobs in March.

Economists had expected employment to jump by 243,000 jobs compared to the spike of 303,000 jobs originally reported for the previous month.

The report also showed the unemployment rate crept up to 3.9 percent in April from 3.8 percent in March. The unemployment rate was expected to remain unchanged.

Treasury yields have shown a steep drop following the release of the report, with the yield on the benchmark ten-year note tumbling below 4.5 percent.

The data combined with the decease by treasury yields is likely to help further offset concerns about the outlook for interest rates.

The reaction to the jobs data adds to the positive sentiment previously generated by a surge by shares of Apple (NASDAQ:AAPL), as the tech giant is spiking by 7.2 percent in pre-market trading.

Apple is rallying after reporting better than expected fiscal second quarter results and announcing a $110 billion stock repurchase.

Stocks fluctuated early in the session on Thursday before moving sharply higher over the course of the trading day. The major averages all showed strong moves to the upside after ending Wednesday’s trading narrowly mixed.

The major averages pulled back off their best levels going into the close but remained firmly positive. The Dow jumped 322.37 points or 0.9 percent to 38,225.66, the Nasdaq surged 235.48 points or 1.5 percent to 15,840.96 and the S&P 500 advanced 45.81 points or 0.9 percent at 5,064.20.

The strength that emerged on Wall Street came as traders seemed to breathe a sigh of relief following the Federal Reserve’s monetary policy announcement on Wednesday.

Traders have recently expressed some concerns the Fed’s next monetary policy move could actually be an interest rate hike rather than a cut, but Fed Chair Jerome Powell post-meeting remarks seem to have alleviated those worries.

“Not only did Powell choose not to give a hawkish press conference, he took great pains to be dovish,” said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance. “At every turn he looked on the bright side of data – from higher-than-expected inflation to recent lower-than-expected economic growth – and dismissed any suggestions that the Fed was pivoting from rate cuts to rate hikes.”

He added, “He explicitly said he believes their next move would be a cut – even if it will take longer to get to that cut than they believed a short time ago – and set the bar extremely high for rate hikes.”

Earlier in the day, stocks saw considerable volatility as traders reacted to the latest batch of U.S. economic data, including a Labor Department report showing a surge by labor costs in the first quarter of 2024.

The Labor Department said unit labor costs soared by 4.7 percent in the first quarter following a revised unchanged reading in the fourth quarter.

Economists had expected labor costs to shoot up by 3.2 percent compared to the 0.4 percent increase that had been reported for the previous quarter.

“Productivity growth wasn’t strong enough to significantly mitigate the rise in wages last quarter,” said Nationwide Financial Markets Economist Oren Klachkin. “The strong rise in unit labor costs is another in a string of recent data points indicating that inflation pressures remain relatively high.”

A separate Labor Department showed initial jobless claims came in unchanged last week, while a Commerce Department report showed the U.S. trade deficit narrowed slightly in March.

Transportation stocks moved sharply higher over the course of the session, resulting in a 2.5 percent spike by the Dow Jones Transportation Average.

Avis Budget (NASDAQ:CAR) and C.H. Robinson Worldwide (NASDAQ:CHRW) skyrocketed on the day after reporting their quarterly results.

Substantial strength also emerged among semiconductor stocks, as reflected by the 2.2 percent surge by the Philadelphia Semiconductor Index.

Retail stocks also showed a significant move to the upside as the day progressed, driving the Dow Jones U.S. Retail Index up by 2.0 percent.

Housing, computer hardware and brokerage stocks also saw considerable strength, while pharmaceutical stocks bucked the uptrend.