On Friday, May 5th, the US stock market closed higher as investors analyzed the April jobs report released by the Labor Department. The report showed that while the US labor market remains strong, growth is moderating. This gave investors hope that the Federal Reserve may pause its interest rate hikes at its upcoming meeting next month. The S&P 500 rose 1.85%, the Dow Jones Industrial Average gained 546 points, or 1.65%, and the tech-heavy Nasdaq Composite closed up 2.25%.
It was a busy week for investors as key earnings from companies like Apple, Starbucks, and Ford came in mostly positive for the quarter. However, regional bank stocks, including PacWest Bancorp, Western Alliance Bancorporation, and Zions, all saw double-digit declines amid reports that PacWest was seeking strategic options, including a potential sale or capital raise. The purchase of First Republic by JPMorgan Chase still fresh in the minds of investors also contributed to heavy losses within the sector.
Despite this, these stocks rebounded at Friday's open and continued to trade higher throughout the day, with PacWest, Western Alliance, and Zions closing up 81%, 49%, and 19%, respectively. Gold prices were down but still closed somewhat near record highs at $2,025.00 an ounce, while the benchmark 10-year Treasury yield rose about 9 basis points to trade near 3.45%. WTI crude oil and Brent crude gained to settle at around $71.30 and $75.29 a barrel, respectively, after tumbling in the wake of the Federal Reserve's rate hike decision earlier in the week.
Investors are still digesting the Federal Reserve's rate hike decision as Fed Chair Jerome Powell suggested that the central bank could pause its rate hikes, but still left the door open for more rate increases down the line. Powell stated during Wednesday's press conference that "A decision on a pause was not made today," but also noted, "There's a sense that we're...much closer to the end of this than the beginning."
Friday's jobs report, particularly the strong pace of wage growth, will be a crucial factor in future Fed rate policy. Nonfarm payrolls rose by 253,000 in April, with the unemployment rate falling to 3.4%. Economists surveyed by Bloomberg expected the US economy to have added 185,000 nonfarm payroll jobs last month, with the unemployment rate ticking marginally higher to 3.6%. Average hourly earnings also topped expectations, rising 4.4% year-on-year versus the expected 4.2%.
Employment gains in March were revised lower to show 165,000 jobs were created during the month, 71,000 fewer than previously reported. February's job gains were also revised lower, from 326,000 to 248,000.
JPMorgan Chase Chief US economist Michael Feroli said in a research note that "with the revised data in hand, the trend in labor market activity looks to be gradually cooling, albeit punctuated by a month of strength in April. We still think this Wednesday's hike was the last of the cycle, though we wouldn't rule out one final hike at the June meeting."
Weekly initial jobless claims surpassed expectations, according to the report released on Thursday, with 242,000 jobless claims filed, an increase of 13,000 from the previous week's revised level.
In terms of individual stocks, Apple saw shares close more than 4% higher on Friday after the company reported quarterly earnings that beat estimates on better-than-expected iPhone sales. Square saw shares fall just under 2% despite beating earnings on both the top and bottom lines.
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