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U.S. Stocks Holding On To Strong Gains After Early Rally

Stocks moved sharply higher early in the session on Friday and continue to turn in a strong performance in afternoon trading. The major averages are extending the rally seen in the previous session, jumping to their best intraday levels in over two weeks.

The major averages have moved roughly sideways in recent trading, hovering firmly in positive territory. The Dow is up 446.55 points or 1.2 percent at 38,672.21, the Nasdaq is up 316.38 points or 2.0 percent at 16,157.34 and the S&P 500 is up 62.29 points or 1.2 percent at 5,126.49.

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 7.0 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 continue to turn in some of the market’s best performances on the day, driving the Philadelphia Semiconductor Index up by 2.4 percent.

Considerable strength also remains visible among housing stocks, as reflected by the 1.8 percent gain being posted 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.

Brokerage, steel, and retail stocks have also shown 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 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 5.7 basis points at 4.514 percent.

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