Jobs Data, Apple Earnings Contribute To Extended Rally On Wall Street

Following the rally seen over the course of Thursday’s session, stocks showed another strong move to the upside during trading on Friday. The major averages all moved sharply higher, with the tech-heavy Nasdaq leading the charge.

The major averages moved roughly sideways after an early surge, remaining firmly positive. The Dow jumped 450.02 points or 1.2 percent to 38,675.68, the Nasdaq spiked 315.37 points or 2.0 percent to 16,156.33 and the S&P 500 shot up 63.59 points or 1.3 percent to 5,127.79.

For the week, the S&P 500 climbed by 0.6 percent, while the Dow advanced by 1.1 percent and the Nasdaq jumped by 1.4 percent.

The extended rally on Wall Street came 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.

The annual rate of wage growth slowed to 4.0 percent in April from 4.1 percent in March, while economists had expected the pace of wage growth to dip to 4.0 percent.

The data helped generate optimism about the outlook for interest rates following the Federal Reserve’s monetary policy meeting earlier in the week.

“In an environment where the market is worried about inflation, a softer jobs report with (slightly) higher unemployment, lower-than-expected wage growth and job creation shows that inflation pressure from wages is easing,” said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance.

He added, “Chair Powell already signaled to the market that rate hikes are off the table in almost any scenario (although rapidly rising inflation would be met with rate hikes), so the market is back to risk on mode as long as the Fed maintains an easing bias.”

Positive sentiment was also generated in reaction to earnings news from Apple (AAPL), with the tech giant surging by 6.0 percent.

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

Meanwhile, a separate report released by the Institute for Supply Management showed U.S. service sector activity unexpectedly contracted in the month of April.

The ISM said its services PMI dipped to 49.4 in April from 51.4 in March, with a reading below 50 indicating contraction. Economists had expected the index to inch up to 52.0.

With the unexpected decrease, the services PMI indicated activity in the sector contracted for the first time since December 2022.

Sector News

Semiconductor stocks turned in some of the market’s best performances on the day, driving the Philadelphia Semiconductor Index up by 2.4 percent.

Software and computer hardware stocks also saw significant strength, contributing to the surge by the tech-heavy Nasdaq.

Considerable strength was also visible among housing stocks, as reflected by the 1.5 percent gain posted by the Philadelphia Housing Sector Index.

Steel, brokerage and retail stocks also showed strong moves to the upside, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Friday, with markets in Japan and mainland China closed for holidays. Hong Kong’s Hang Seng Index jumped by 1.5 percent, while Australia’s S&P/ASX 200 Index climbed by 0.6 percent.

The major European markets also moved to the upside on the day. While the German DAX Index advanced by 0.6 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index both rose by 0.5 percent.

In the bond market, treasuries gave back ground after an early rally but remained firmly positive. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 7.1 basis points to 4.50 percent.

Looking Ahead

Following several key events over the past week, the U.S. economic calendar for next week is relatively quiet, potentially shifting the spotlight to earnings news from several big-name companies.

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