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U.S. Stocks Extending Yesterday's Rally Following Jobs Data, Apple Earnings

Stocks have moved sharply higher during trading on Friday, extending the strong upward move seen over the course of the previous session. The major averages have all moved to the upside, with the tech-heavy Nasdaq leading the charge.

Currently, the major averages are off their best levels of the day but still firmly positive. The Nasdaq is up 306.22 points or 1.9 percent at 16,147.18, the S&P 500 is up 52.29 points or 1.0 percent at 5,116.49 and the Dow is up 353.10 points or 0.9 percent at 38,578.76.

The extended rally on Wall Street comes 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.

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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.

Treasury yields showed a steep drop following the release of the report, helping further offset concerns about the outlook for interest rates.

“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 6.7 percent.

Apple is rallying 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 are extending the strong upward move seen in the previous session, driving the Philadelphia Semiconductor Index up by 2.4 percent.

Considerable strength is also visible among housing stocks, as reflected by the 2.3 percent jump by the Philadelphia Housing Sector Index.

Software and computer hardware stocks are also seeing significant strength on the day, contributing to the surge by the tech-heavy Nasdaq.

Retail, steel and commercial real estate stocks have also moved notably higher, while pharmaceutical stocks are bucking the uptrend once again.

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 have also moved to the upside on the day. While the U.K.’s FTSE 100 Index has climbed by 0.5 percent, the French CAC 40 Index and the German DAX Index are both up by 0.6 percent.

In the bond market, treasuries have pulled back off their early highs but remain in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.7 basis points at 4.354 percent.

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