Five things you need to know before the market opens on Friday May 5:
1. -- Stock Futures Higher As Apple, Bank Stocks Lift Sentiment
U.S. equity futures moved higher Friday, as markets looked to snap a four-day losing streak amid a rebound in regional bank stocks and a better-than-expected March quarter update from Apple.
Investors are still likely to focus on today's April payroll release, however, to consolidate the modest early gains following hints of a pause in rate hikes from Federal Reserve Chairman Jerome Powell earlier this week in Washington.
Forecasters expect hiring to have slowed notably from March levels, amid ongoing job cuts in the tech space; Challenger, Gray & Christmas reported yesterday that April layoffs nearly 67,000, a 176% increase from the same period last year, taking the four-month total to 337,411.
A softer payroll number, particularly with respect to wage growth, could cement bets that the Fed will -- despite its messaging -- be forced to consider rate cuts as early as this autumn if the economy were to flirt with recession.
The CME Group's FedWatch has completely priced out any further rate hikes between now and the end of the year, with traders now placing a 90% chance that the Fed will lower its Fed Funds rate at the September policy meeting.
That said, benchmark 2-year Treasury note yields were marked 9 basis points higher from last night's close at 3.811% while 10-year notes gained 4 basis points to 3.401%. The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.1% lower at 101.299.
A solid March quarter for Apple, which included a surprise boost in iPhone sales, a dividend increase and a $90 billion share buyback, gave overnight sentiment a lift, with modest rebounds in PacWest Bancorp and Western Alliance adding to pre-market optimism.
Heading into the start of the trading day on Wall Street, futures tied to the the S&P 500 were priced for an 18 point opening bell gain while those linked to the Dow Jones Industrial Average are set for a 95 point advance. The tech-focused Nasdaq was marked 72 points higher.
In Europe, the region-wide Stoxx 600 was marked 0.05% higher following yesterday's quarter point rate hike from the European Central Bank, while London's FTSE 100 gained 0.4% in London.
Overnight in Asia, the region-side MSCI ex-Japan index was marked 0.47% higher into the close of trading while the Nikkei 225 remained shut for the third day of Japan's annual spring holiday period.
2. -- April Jobs Report In Focus Amid 'Data Dependent' Fed
U.S. employers likely added around 180,000 new jobs to the economy last month, according to Street forecasts for today's highly-anticipated April non-farm payroll report, as hiring slowed amid concerns of a near term recession.
With tech layoffs surging to the highest levels since the dot-com bubble of 2001, and broader job openings falling at the fastest pace in two years, analysts expect the April payroll figures to show a marked decline in new hires, but only modest changes in wages, suggesting a tight labor market will continue to stoke inflation fears even as GDP growth slows.
Average hourly earnings are expected to rise 0.3% on the month, and 4.2% on the, according to Street forecasts, exactly the pace recorded over the month of March, when payroll additions were pegged at 236,000.
"The speed of the rollover in hiring plans suggests to us that businesses are having a rapid and unpleasant rethink about the outlook, which raises the distinct possibility that payroll growth will slow more rapidly," said Ian Shepherdson of Pantheon Macroeconomics
3. -- Apple Shares Jump As iPhone Sales Power Q2 Earnings Beat
Apple (AAPL) shares moved firmly higher in pre-market trading after the tech giant posted a surprise jump in iPhone sales, as well as record services revenues, both of which powered a stronger-than-expected second quarter earnings report.
iPhone revenues rose 1.5% from last year to $51.33 billion, linked in part to the sale of high-end iPhone Pro models that were jammed-up over the holiday period. That gain offset declines in Mac and iPad sales, as well as a 3% decline in revenues from China, and helped boost earnings for the three months ending in March to $1.52 a share, a tally that topped Street forecasts by 9 cents.
Group revenues were still down 2.5% from last year at $94.84 billion, a rate CFO Luca Maestri said would likely carry over into the June quarter, although gross margins would likely improve to between 44% and 44.5%.
"This was not a crucial quarter for Apple, as it wasn't Q4, but this is a quarter of laying the groundwork on the products that they will release in the back half," said David Wagner, portfolio manager at Aptus Capital Advisors.
Apple shares were marked 2.2% higher in pre-market trading to indicate an opening bell price of $169.42 each..
4. -- Warner Bros Discovery Earnings On Deck After Paramount Plunge
Warner Bros Discover (WBD) shares edged higher in pre-market trading ahead of the entertainment and studio group's first quarter earnings prior to the opening bell.
Warner Bros Discovery, which owns the HBO Max and Discovery+ streaming services, is expected to post a first quarter profit of 1 penny per share on revenues of $10.8 billion.
Last month, Warner Bros Discovery, which was formed from the spin-off of AT&T's (T) media assets last April, unveiled plans to launch its new Max service, which combines scripted content from HBO Max with Discovery's reality-based programs, on May 23 as it looks to consolidate content investment amid a pullback in consumer spending on streaming entertainment and a slump in ad sales.
Rival Paramount Global (PARA) saw its shares fall more than 28% on Thursday after it delivered weaker-than-expected expected first quarter earnings while slashing its dividend by nearly 80% in a move designed to save around $500 million a year.
Warner Bros Discover shares were marked 0.32% higher in pre-market trading to indicate an opening bell price of $12.37 each.
5. -- Banks Trim Borrowing From Fed, PacWest, Western Alliance Rebound
U.S. banks curtailed borrowing from the Federal Reserve's various lending programs this week, despite fresh upheaval in the financial sector following the sale of First Republic (FRC) and ongoing stresses at PacWest Bancorp (PACW).
Banks borrowed just $5.3 billion from the Fed's main discount window over the seven-day period ending on May 3, according to Fed data, down from the $73.9 billion handed-out over the prior period.
The bulk of that decline, however, was linked to a change in allocation of borrowing from First Republic Bank, which was sold to JPMorgan Chase (JPM) last Sunday. First Republic's borrowing's were labeled as "other credit", with that tally rising by around 34% to $228.2 billion.
Borrowing from the Fed's new Bank Term Funding Program, which allows banks to exchange high-quality assets for one-year loans, fell by $5.5 billion to $75.8 billion. The Fed's overall balance sheet, meanwhile, shrunk by around $59 billion to $8.5 trillion.
PacWest shares, which lost nearly half of their value in a brutal Thursday session, was marked 14.2% higher in pre-market trading to indicate an opening bell price of $3.62 each. Western Alliance (WAL) shares, meanwhile, gained 9.8% to $19.99 each.
