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U.S. stocks on Friday opened solidly higher after the latest nonfarm payrolls report came in much cooler than expected.
Equities also got a boost from a jump in Apple (AAPL) after the world’s largest publicly listed firm delivered better-than-expected quarterly results and unveiled a record $110B buyback.
Minutes after the opening bell, the tech-heavy Nasdaq Composite (COMP:IND) was up 1.87% to 16,136.44 points. The blue-chip Dow (DJI) climbed 1.13% to 38,658.59 points, while the benchmark S&P 500 (SP500) advanced 1.21% to 5,125.41 points.
Of the 11 S&P sectors, nine were in the green, led by Technology.
Earlier, before the start of regular trading, stock index futures had sharply added to their gains after the U.S. Bureau of Labor Statistics said that 175K jobs were added in April, significantly below the consensus estimate of 243K. The April reading also decelerated sharply from March’s revised figure of 315K jobs. Meanwhile, the quits rate ticked up by a whisker to 3.9% versus a consensus of 3.8% and a prior figure of also 3.8%.
The soft jobs report was welcomed by investors, especially after recent data that has continued to point to resilience in the labor market along with sticky inflation which has clouded Federal Reserve interest rate cut expectations.
“The soft-landing bulls will and should run with this report. Average hourly earnings over the last three months is 2.8%. Given the growth in labor productivity, the wage inflation figures are consistent with the Fed’s longer-run inflation objectives,” Renaissance Macro Research said on X (formerly Twitter).
Treasury yields extended their losses after the jobs report as traders snapped up bonds. The longer-end 30-year yield (US30Y) was down 6 basis points to 4.67%, while the 10-year yield (US10Y) was down 9 basis points to 4.50%. The shorter-end more rate-sensitive 2-year yield (US2Y) was also down 9 basis points to 4.79%.
See live data on how Treasury yields are doing across the curve at the Seeking Alpha bond page.
“The April jobs report feels really good – consistent with a soft landing. The job market is strong – underlying monthly job growth is near 200k – but is cooling off – unemployment is notching towards 4% and wage growth to sub-4%. Stagflation/recession worries appear off base,” Mark Zandi, chief economist at Moody’s Analytics, said on X.
Before the jobs report, Apple (AAPL) garnered a chunk of the spotlight. The tech giant announced FQ2 2024 results after the closing bell on Thursday. Expectations were low going into the report amid slumping demand and declining sales for iPhones in China, along with a perceived falling behind in the artificial intelligence race. But the Tim Cook-led company managed to deliver better-than-feared results. Investors were also cheered by Apple (AAPL) adding a record $110B to its share buyback program and raising its quarterly dividend by 4%.
“Apple (AAPL) had a pretty decent second-quarter overall as the company reached a new Services revenue record and the Services business, as a percentage of consolidated sales, reached its highest sales representation ever at 26%. This means that Apple’s (AAPL) push to diversify its hardware sales-dependent enterprise is succeeding,” Seeking Alpha contributor The Asian Investor said in an earnings reaction on Thursday.
“The most compelling element of an investment in Apple (AAPL) is that the company is earning a ton of free cash flow that is set to be returned to shareholders through a very generous $110B stock buyback program,” The Asian Investor added.
Other than the nonfarm payrolls report, the economic calendar on Friday is fairly light. Market participants will be receiving readings on the services industry from S&P Global and the Institute for Supply Management.
Looking at other active stocks, Amgen (AMGN) rallied more than 12% and provided another boost to the Dow (DJI), after the pharmaceutical major gave a positive update on its investigational obesity drug and reported quarterly results.
