Stocks finished slightly higher Thursday, as investors reacted to a mixed set of messages from Federal Reserve Chairman Jerome Powell and eyed the release of Apple's latest quarterly earnings after the closing bell.
The Dow Jones Industrial Average gained 322 points, or 0.85%, to 38,225.66, while the S&P 500 rose 45 points, or 0.91%, to 5,064.20, and the tech-heavy Nasdaq climbed 235 points, or 1.51%, to 15,840.96.
The Federal Reserve held its benchmark lending rate unchanged Wednesday, noting a "lack of further progress" in its inflation fight, and suggested that it would hold off on rate cuts until at least later in the year.
“Jay Powell didn't sound a loud alarm on inflation,” said Thierry Wizman, Global FX & Rates Strategist at Macquarie. “That helped keep up hope for a rate cut from the Fed this year. His most important point was that the labor market is not as tight as the recent strong job growth trend would have you think.”
Wizman said that immigration may be the key, as traders are going to focus more on measures of labor market turnover going forward.
"Still, Powell's calmness may not reflect the majority view among Fed officials," he said. "As happened after March 20, we expect that the Fed speeches and appearances coming up will be more 'hawkish' than Powell's discourse, and help prop bond yields up, not down."
Updated at 12:35 PM EDT
Riding off into the sunset
Peloton Interactive (PTON) shares slumped to a fresh all-time low in mid-day trading after the connected fitness group said Barry McCarthy is stepping down as CEO and its planning around big round of job cuts.
Karen Boone and Chris Bruzzo, who both serve on the Peloton board, will act as co-CEO until a permanent replacement is named.
Peloton shares were last marked 11.5% lower at $2.85 each, a move that extends their 2024 decline to around 50%. The group, which had a peak market value of $46 billion in January of 2021, is now worth just under $1.05 billion.
Quite the fade. No one believed management on that EC. All the "positives" from that PR were thrown out with the bath water once they started speaking.
— Paul Cerro (@paulcerro) May 2, 2024
I fear that if not sold, $PTON might not ever realize it's post-COVID potential https://t.co/oItdKyGQre pic.twitter.com/Rs4zMQJlwE
Updated at 10:50 AM EDT
An Apple a day
Apple shares are moving higher in the mid-morning session ahead of the tech giant's March quarter earnings after the closing bell.
Analysts see Apple, which has lost its status as the market's biggest stock as well as the world's biggest smartphone seller this year, to post the biggest slump in iPhone sales since 2021.
Apple was last marked 1.4% higher at $171.69 each but is still down around 7.6% for the year.
Related: Apple earnings are more crucial to the stock market than Nvidia
Updated at 9:34 AM EDT
Solid open
The S&P 500 added around 38 points, or 0.74%, in the opening minutes of trading with the Nasdaq up 155 points, or 1%, and the Dow up 242 points.
Benchmark 2-year note yields nudged 2 basis points higher, to 4.941%, following the softer-than-expected weekly claims data while 10-year notes rose 3 basis points to 4.641%.
So far, this week’s employment numbers haven’t shown any significant slowing in the labor market," said Chris Larkin, managing director for trading and investing at E*Trade from Morgan Stanley.
"After a choppy reaction to Wednesday’s less-hawkish-than-expected Fed announcement, tomorrow’s monthly jobs report could set the near-term market tone," he added.
S&P 500 Opening Bell Heatmap (May 02, 2024)$SPY +0.72% 🟩$QQQ +0.83% 🟩$DJI +0.59% 🟩$IWM +1.36% 🟩 pic.twitter.com/orcDTSAK3J
— Wall St Engine (@wallstengine) May 2, 2024
Updated at 8:53 AM EDT
Jobbing it
Weekly unemployment benefit claims held steady at 208,000 last week, the Labor Department said, another tally that came in light of Wall Street forecasts and adds another layer of complexity to the red-hot jobs market.
Challenger Gray's closely-tracked report on corporate layoffs, meanwhile, showed a 3.3% decline in April when compared to last year and a big slump from the overall tally in March.
“The labor market remains tight. But as labor costs continue to rise, companies will be slower to hire, and we expect further cuts will be needed," said CEO Andrew Challenger. "This low April figure may be the calm before the storm.”
Stock Market Today
Stocks powered higher in the afternoon session on May 1 but gave up most of those gains over the final hour of trading following the Fed's two-day policy meeting.
The central bank held rates steady at between 5.25% and 5.5% and said it needed more time and data before it could gain confidence that inflation is returning to its 2% target.
The hawkish stance reflected, however, a caveat: Powell's rejection of a pending rate hike, which alongside plans to slow the pace of Treasury bond sales from its $7.4 trillion balance sheet triggered the market's initial bullishness.
"I think it’s unlikely that the next policy rate move will be a hike. I would say it’s unlikely," Powell told reporters in Washington. "You know, our policy focus is really what I just mentioned ... which is how long to keep policy restrictive."
When markets did return to the "how long" portion of his remarks, however, stocks gave back nearly all their late-session gains as bets on a Fed rate cut between now and the latter part of the year faded quickly.
That said, with benchmark 2-year note yields falling from around 5.04% just before the Fed rate decision to around 4.929% in early New York trading, stocks have a smoother runway heading into the Thursday session ahead of jobless claims and factory orders data prior to the opening bell.
Futures contacts tied to the S&P 500 are priced for a 34 point gain at the start, while those linked to the Dow Jones Industrial Average suggest a 170 point advance.
Related: Fed faces fine-line walk between inflation hawk and slow-growth realist
The tech-focused Nasdaq, which is the most sensitive to interest-rate changes, is called 160 points higher, with Apple (AAPL) earnings slated for after the close.
Apple shares were marked 1% higher in premarket trading at $171.02 but are still down more than 10% for the year as investors worry that slumping iPhone sales and a lack of AI ambitions will hold back gains over the coming quarters.
In overseas markets, Europe's Stoxx 600 slipped 0.23% in Frankfurt, with Novo Nordisk, the Danish drugmaker that introduced weight-loss treatments Ozempic and Wegovy, falling 2.7% despite blockbuster sales and an improved profit forecast.
Shell shares, meanwhile, rose 1.05% in London, helping the FTSE 100 to a 0.32% gain, after the oil giant posted stronger-than-expected first-quarter earnings of $7.7 billion and unveiled plans for a $3.5 billion buyback.
More Wall Street Analysts:
- Analyst unveils new Nike price target ahead of big summer for sports
- Analysts weigh in on Google-parent Alphabet’s stock after cloud event
- Analysts revamp Disney stock price target after proxy fight
Overnight in Asia, a surprise move higher in the yen ignited talk of currency-market intervention from Japan's Ministry of Finance. But the gains were short-lived and the yen was last marked at 155.29 against the U.S. dollar.
The Nikkei 225, meanwhile, ended 0.09% lower in Tokyo, while the regionwide MSCI ex-Japan benchmark rose 0.6%. Stocks in China were closed for the annual Labor Day celebrations.
Related: Veteran fund manager picks favorite stocks for 2024
