U.S. Stocks Remain Sharply Higher After Early Rally
Stocks moved sharply higher early in the session and continue to see significant strength in afternoon trading on Friday. With the strong upward move, the major averages are regaining ground after trending lower in recent sessions.
Currently, the major averages are hovering firmly in positive territory. The Dow is up 423.63 points or 1.3 percent at 33,551.37, the Nasdaq is up 227.53 points or 1.9 percent at 12,193.93 and the S&P 500 is up 62.19 points or 1.5 percent at 4,123.41.
The rally on Wall Street partly reflects bargain hunting, as some traders look to pick up stocks at reduced levels following recent weakness.
The major averages closed lower for four consecutive sessions, with the Dow ending Thursday’s trading slightly lower for 2023.
Regional banks have helped lead the recovery after ongoing concerns about turmoil in the sector weighed on the markets in recent sessions.
PacWest Bancorp (PACW) is skyrocketing by 81.4 percent after plummeting by 50.6 percent to a record closing low on Thursday.
Western Alliance (WAL), Zions Bancorp (ZION) and Comerica (CMA) are also posting standout gains after JPMorgan upgraded the stocks to Overweight, saying they appear “substantially mispriced.”
A positive reaction to quarterly results from tech giant Apple (AAPL) has also contributed to the rebound on Wall Street.
Shares of Apple are jumping by 4.6 percent after the company reported fiscal second quarter results that beat analyst estimates on both the top and bottom lines.
Traders are also reacting to the release of the Labor Department’s closely watched monthly jobs report for April.
While the report showed job growth far exceeded economist estimates in the month of April, the jump in employment followed notable downward revision to the two previous months.
The Labor Department said non-farm payroll employment shot up by 253,000 jobs in April compared to economist estimates for an increase of about 179,000 jobs.
However, the job growth in February and March was downwardly revised to 248,000 jobs and 165,000 jobs, respectively, reflecting a combined downward revision of 149,000 jobs.
The report also said the unemployment rate edged down to 3.4 percent in April from 3.5 percent in March. Economists had expected the unemployment rate to remain unchanged.
“The report doesn’t change our view that the Fed will hold rates steady in June,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics. “However, the Fed’s pause was a hawkish one, and if job growth and earnings don’t moderate from the April pace, rate hikes could be back in play.”
She added, “We expect job growth will slow as the economy enters a mild recession as cumulative rate hikes and a tightening in lending standards weigh on the economy and the labor market in the second half of the year.”
Reflecting the rebound by banking stocks, the KBW Bank Index has spiked by 4.5 percent after ending the previous session at its lowest closing level in over two years.
Substantial strength also remains visible among brokerage stocks, as reflected by the 3.5 percent jump by the NYSE Arca Broker/Dealer Index. The index is bouncing off a more than six-month closing low.
Steel stocks are also regaining ground following recent weakness, driving the NYSE Arca Steel Index up by 3.2 percent.
Airline, energy and computer hardware stocks are also seeing considerable strength, while telecom stocks are among the few groups bucking the uptrend.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Friday, with markets in Japan and South Korea closed for holidays. China’s Shanghai Composite Index fell by 0.5 percent, while Hong Kong’s Hang Seng Index rose by 0.5 percent.
Meanwhile, the major European markets all showed strong moves to the upside on the day. While the U.K.’s FTSE 100 Index jumped by 1.0 percent, the French CAC 40 Index and the German DAX Index surged by 1.3 percent and 1.4 percent, respectively.
In the bond market, treasuries are giving back ground after moving sharply higher over the three previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 10.3 basis points at 3.454 percent.
Source: Read Full Article