Jobs Data, Apple Earnings May Lead To Extended Rally On Wall Street
May 03 2024 - 9:09AM
IH Market News
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.
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