Jobs Data, Apple Earnings May Lead To Extended Rally On Wall Street

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 (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 (CAR) and C.H. Robinson Worldwide (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.

Commodity, Currency Markets

Crude oil futures are climbing $0.54 to $79.49 a barrel after edging down $0.05 to $78.95 a barrel on Thursday. Meanwhile, after slipping $1.40 to $2,309.60 an ounce in the previous session, gold futures are advancing $16.50 to $2,326.10 an ounce.

On the currency front, the U.S. dollar is trading at 152.07 yen versus the 153.64 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0802 compared to yesterday’s $1.0725.

Asia

Asian stocks rose broadly on Friday, with tech shares leading the charge following Apple’s quarterly earnings beat and massive buyback program. Regional trading volumes were thin due to market holidays in mainland China and Japan.

The dollar index lingered near a three-week low ahead of key U.S. jobs data report later in the day that might point to a slower but still strong pace of hiring in April.

Gold drifted below $2,300 per ounce and headed for its first back-to-back weekly losses in more than two months amid fears of higher-for-longer U.S. interest rates.

Oil prices rose but were set for another weekly loss amid easing Middle East tensions and signs of weak U.S. demand.

Hong Kong’s tech-heavy Hang Seng Index rallied 1.5 percent to 18,475.92, extending gains for the ninth consecutive session as China stepped up efforts to spur an economic rebound. Property developers surged on expectations of more stimulus measures.

Seoul stocks edged lower, with the Kospi falling 0.3 percent to 2,676.63. Top portal operator Naver jumped more than 3 percent after reporting better-than-expected first-quarter earnings.

Australian stocks closed higher for a second straight session, with rate-sensitive banks and real estate stocks pacing the gainers ahead the Reserve Bank of Australia’s monetary policy decision on May 7.

The benchmark S&P ASX 200 Index climbed 0.6 percent to 7,629, while the broader All Ordinaries Index settled 0.6 percent higher at 7,897.50.

Gold miners suffered heavy losses, with Evolution Mining and St Barbara plunging 5.6 percent and 7.7 percent, respectively.

Macquarie Group shares fell 2.2 percent after the investment bank reported annual earnings that missed estimates.

Across the Tasman, New Zealand’s benchmark S&P/NZX 50 Index ended up 0.5 percent at 11,938.08, notching its second consecutive week of gains.

Europe

European stocks have moved higher on Friday after European Central Bank policymaker Yannis Stournaras said he sees three rate cuts in 2024.

Stournaras reportedly said in an interview that three rate cuts in 2024 is the more likely scenario after considering recent growth and inflation data.

A slew of encouraging earnings updates and signs of improvement in U.K. services growth also helped underpin investor sentiment.

The U.K. service sector expanded at the quickest pace in nearly a year, spurred by a renewed strengthening of order books, final data from S&P Global showed.

The services purchasing managers’ index rose to 55.0 in April from 53.1 in March. That was also above the flash score of 54.9.

Investors shrugged off separate data showing that French industrial production unexpectedly declined in March after rebounding in the previous month.

While the French CAC 40 Index has climbed by 0.6 percent, the U.K.’s FTSE 100 Index and the German DAX Index are both up by 0.5 percent.

In corporate news, German household and personal products business Henkel AG & Co. KGaA has surged after raising its sales and earnings outlook for 2024.

Credit Agricole, France’s second-biggest listed bank, has also jumped after posting a forecast-beating 55 percent jump in first-quarter net profit.

Rival Societe Generale has also soared as it backed guidance after reporting a smaller-than-expected 22 percent slide in first-quarter net income.

Anglo American has also jumped in London after reports that commodities group Glencore was considering a rival bid for the mining giant.

Trainline, which runs a digital platform for buying rail and bus tickets, has also spiked after annual earnings rose and the company announced it would start buying back more shares over the course of 12 months.

Publishing company Future has also shown a strong move to the upside after appointing Sharjeel Suleman as its CFO.

On the other hand, shares of Daimler Truck Holding have slumped after the company reported a decline in first quarter global sales.

U.S. Economic Reports

After reporting stronger than expected job growth over the past several months, the Labor Department released a report on Friday 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.

At 10 am ET, the Institute for Supply Management is scheduled to release its report on service sector activity in the month of April.

The ISM’s services PMI is expected to inch up to 52.0 in April from 51.4 in March, with a reading above 50 indicating growth.

New York Federal Reserve President John Williams and Chicago Federal Reserve President Austan Goolsbee are due to participate in a panel before a “Getting Global Monetary Policy on Track” event hosted by the Hoover Institution at Stanford University at 7:45 pm ET.

Stocks In Focus

Shares of Amgen (AMGN) are moving sharply higher in pre-market trading after the biotechnology company reported first quarter results that exceeded analyst estimates on both the top and bottom lines.

Payment services provider Bock (SQ) is also likely to see initial strength after reporting better than expected first quarter results.

Meanwhile, shares of Cloudflare (NET) are seeing significant pre-market weakness after the cloud services provided reported first quarter results that beat expectations but provided disappointing full-year revenue guidance.

Online travel company Expedia (EXPE) may also come under pressure after reporting better than expected first quarter revenue but lowering its full-year revenue forecast.