The world’s largest technology companies have driven a stock market rebound ahead of Apple Inc.’s earnings report. Wall Street traders are also anticipating Friday’s key jobs report. Equities have halted a two-day drop, with chipmaker Nvidia Corp. leading gains and Apple up by 1.5%. There are expectations that Apple will announce a buyback, following in the footsteps of fellow tech giants Alphabet Inc. and Meta Platforms Inc. Any news related to artificial intelligence features might provide added excitement for a stock that has seen a 10% decline this year.
In the run-up to the monthly employment report, data has shown that US labor costs experienced their biggest jump in a year, while productivity gains slowed. This adds to concerns that inflation will remain elevated. Economists surveyed by Bloomberg forecast a gain of 240,000 nonfarm payrolls, which would be the slowest pace since November.
The Federal Reserve, following reviewing data that pointed to lingering price pressures, decided to leave the target range for benchmark rates unchanged. Fed Chairman Jerome Powell stated that it is unlikely that the next move by the Fed will be to raise rates. However, there is an acknowledgment that the Fed is willing to keep rates higher for a longer period of time. Chris Larkin from Morgan Stanley stated, “The markets will be hungry for any data suggesting the economy isn’t heating up any more than it did in the first quarter.”
The S&P 500 index is hovering near 5,040, while the Nasdaq 100 has risen almost 1%. Qualcomm Inc., the world’s biggest seller of smartphone processors, saw a surge in its stock on the back of an upbeat forecast. However, eBay Inc. experienced a slump due to a disappointing outlook. Treasury 10-year yields fell three basis points to 4.60% and the dollar retreated.
The options market predicts that stocks will experience significant volatility following the release of the US jobs report. Market participants expect that this report will provide more clarity on how much the Federal Reserve may cut interest rates this year. Based on the cost of at-the-money puts and calls expiring on Friday, the S&P 500 Index is expected to move 1.2% in either direction, according to Stuart Kaiser, Citigroup Inc.’s head of US equity trading strategy. This is the largest implied swing ahead of an employment report since March 2023.
Bank of America Corp.’s Savita Subramanian believes that a sturdy economy will sustain the bull-market run in US stocks, even without any Federal interest-rate cuts. She states that she expects a soft landing, with a reasonable market environment, potential higher growth, higher rates, and slightly higher inflation.
In terms of corporate highlights, Peloton Interactive Inc. announced that its CEO, Barry McCarthy, is stepping down as the company undergoes a major restructuring that includes a 15% reduction in its global workforce as a cost-cutting measure. MGM Resorts International reported sales and earnings for the first quarter that surpassed analysts’ projections due to the post-pandemic recovery in Macau and a new partnership with Marriott International Inc. Carvana Co. reported stronger earnings with revenue exceeding expectations as the company implements its restructuring plan and regains sales momentum. DoorDash Inc., the largest food delivery service in the US, offered a disappointing profit forecast for the current quarter as it invests in expanding its list of non-restaurant partners and improving efficiency. Moderna Inc. reported a narrower first-quarter loss than expected as cost-cutting measures helped offset a significant decline in its Covid business. Apollo Global Management Inc. reported higher first-quarter profit, driven by increased management fees and a record $40 billion of private credit origination, a key area of growth.
Looking ahead, key events this week include Eurozone unemployment data, US unemployment and nonfarm payrolls data, ISM Services data, and a speech by Chicago Fed President Austan Goolsbee.
In terms of market movements, the S&P 500 rose 0.5%, the Nasdaq 100 rose 0.8%, the Dow Jones Industrial Average rose 0.5%, the Stoxx Europe 600 fell 0.2%, and the MSCI World index rose 0.6%. In currency markets, the Bloomberg Dollar Spot Index fell 0.6%, the euro was little changed at $1.0706, the British pound fell 0.2% to $1.2507, and the Japanese yen rose 0.5% to 153.84 per dollar. In cryptocurrency markets, Bitcoin rose 3.3% to $59,212.34, and Ether rose 1.7% to $2,985.99. Bond yields saw a decline, with 10-year Treasuries falling three basis points to 4.60%, Germany’s 10-year yield declining four basis points to 2.54%, and Britain’s 10-year yield declining eight basis points to 4.29%. In commodities, West Texas Intermediate crude fell 0.6% to $78.49 a barrel, and spot gold fell 0.9% to $2,298.63 an ounce.
In summary, the stock market rebound driven by the largest technology companies and anticipation around Apple Inc.’s earnings report demonstrates the influence of these market giants. The labor market and inflation concerns are keeping investors on edge as they anticipate the release of the US jobs report. The Federal Reserve’s decision to leave rates unchanged, while signaling a willingness to keep rates higher for longer, has implications for the future direction of interest rates. Overall, market participants are closely monitoring economic data and corporate performance for indications of future trends in the market.