Wall Street experienced a positive shift on Friday following a weaker-than-anticipated jobs report, reigniting hopes for a potential interest rate cut by the Federal Reserve later this year. The slowdown in U.S. job growth in April, coupled with a decrease in annual wages below 4% for the first time in almost three years, led traders to speculate that an interest rate cut could occur as soon as September. According to David Russell, the global head of market strategy at TradeStation, the concerns surrounding wage pressures that have been casting a shadow over the market were somewhat alleviated by the recent data. The market is beginning to see a case for rate cuts gaining strength as the second quarter kicks off with a more subdued economic landscape.
All three major indexes on Wall Street were poised to finish the week with gains as a result of the positive response to the data. Yields on government bonds dropped after the release of the report, with the 10-year note yield settling at 4.509%. The CBOE Volatility index, also known as the “fear gauge” on Wall Street, reached its lowest level in a month following the news. This data comes on the heels of a more doveish stance from the Federal Reserve regarding interest rates in their recent policy meeting.
Apple and Amgen were among the standout performers for the day, with Apple surging 6.7% after announcing a $110 billion share buyback program and surpassing modest expectations for quarterly results and forecasts. This performance outpaced that of other megacap stocks on the market. The information technology sector led sectoral gains, climbing 3% during the trading session. Amgen also saw a significant increase, rising 13.1%, on the back of positive indications from a mid-stage study of its experimental weight-loss drug, MariTide.
Expedia, on the other hand, experienced a setback, falling 14.1% after revising its full-year revenue growth forecast due to a decline in gross bookings resulting from challenges in its vacation rental platform. Despite this, the majority of companies in the S&P 500 have reported better-than-expected earnings, with 76.8% surpassing analysts’ predictions. This is higher than the historical average of 67%, as indicated by LSEG data.
Advancing issues on the NYSE outnumbered decliners by a ratio of 3.35-to-1, while the Nasdaq saw a ratio of 2.13-to-1 in favor of advancers. The S&P 500 recorded 18 new 52-week highs and one new low, while the Nasdaq posted 106 new highs and 44 new lows. With the market showing signs of recovery and optimism surrounding a potential interest rate cut by the Fed, investors are cautiously optimistic as they navigate the evolving economic landscape.