U.S. stocks soared on Friday, boosted by strong earnings from Apple (AAPL) and a weaker-than-expected jobs report reigniting expectations that the Federal Reserve could cut interest rates sooner than expected. did.
Dow Jones Industrial Average (^DJI) futures rose 1.3% (over 450 points) and S&P 500 (^GSPC) futures rose 1.1%. The tech-heavy Nasdaq 100 (^NDX) contract rose about 1.6%. All three indicators are poised to grow based on the strong closing price gains from Thursday.
April's jobs report highlighted a cooling U.S. labor market as employers added 175,000 jobs and the unemployment rate unexpectedly rose to 3.9%. Economists had expected employment to rise by 240,000.
The report raised expectations that the Fed would cut interest rates sooner than expected. Traders see a roughly 50-50 chance of a rate cut at the July meeting, according to the CME FedWatch tool, up sharply from Thursday.
Meanwhile, Apple was the corporate star on Friday, surprising investors with better-than-expected quarterly profits and better-than-expected revenue from China in the face of reports of weak iPhone sales.
While CEO Tim Cook talked about Apple's AI development plans (a key focus this fiscal year), the company's $110 billion stock buyback plan, the largest in U.S. history, captured the market's attention. Apple shares rose 7% in premarket trading, on track to lift the Dow.
The blue-chip index also received a boost from giant Amgen (AMGN) after comments from its CEO suggested its obesity drug could challenge market leader Novo Nordisk (NVO). The stock soared 13%.
read more: Impact of Fed interest rate decisions on bank accounts, CDs, loans, and credit cards
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Dow soars 500 points in morning trading
A weaker-than-expected jobs report reignited hopes on Wall Street that the Fed would eventually cut interest rates this year as the unemployment rate rose to 3.9%, prompting central bank officials to challenge current restrictions. It signaled that policy was still having an impact on the economy.
The Dow Jones Industrial Average (^DJI) rose 1.5% (over 500 points) and the S&P 500 (^GSPC) rose 1.2%. The Nasdaq Composite Index (^IXIC), which has a high proportion of high-tech stocks, rose about 1.9%. All three indicators are poised to grow based on the strong closing price gains from Thursday.
Valuation controversy surrounding Apple
The valuation debate for Apple (AAPL) stock continues after a soft quarter (I don't call it soft, even though the sell side is overlooking all the revenue declines and only focusing on Apple's surprises). Let's start with some AI catalysts coming soon.
Ananda Baruah of Loop Capital makes a great point:
“The stock itself isn't 'overvalued'… but it doesn't scream cheap, either. Given that Apple has been trading more in the middle of its recent trading range, its fundamentals are weak at the moment. It's difficult to tell whether valuation is your friend or foe.While near-term stock price trends are likely to fluctuate, our predictions currently don't seem to be as volatile as Wall Street's. Given Aplle's potential, the stock price movement in the second half of this year could be more “situational.” Because he generates news about two areas that could be catalysts: Gen AI and AR/VR (i.e. VisionPro). ”
