FX.co ★ U.S. Stocks Holding On To Strong Gains After Early Rally

The stock market experienced a significant rise early on Friday, maintaining a strong performance into the afternoon. The major averages have not only built on their previous rally but have reached their highest intraday levels in more than a fortnight.

Recently, the major indexes have shown a steady pattern, maintaining a solid position in the green zone. The Dow Jones has seen an increase by 446.55 points or 1.2 percent, reaching 38,672.21, while the Nasdaq saw a 316.38 point increase or 2.0 percent, hitting 16,157.34, and the S&P 500 experienced a 62.29 point or 1.2 percent increase, reaching 5,126.49.

This extended rally on Wall Street comes on the heels of a Labor Department report with keen market interest, indicating that employment growth in the U.S. for April was smaller than anticipated.

The report shows that non-farm payroll employment rose by 175,000 in April, after a larger surge of an upwardly revised 315,000 jobs in March.

The jump in job figures fell short of economists’ expectations, who had predicted an increase of 243,000 jobs, compared to the sharp rise of 303,000 jobs the previous month.

The unemployment rate showed a marginal increase to 3.9 percent in April from 3.8 percent in March, despite expectations that it would remain stable. Additionally, the annual wage growth rate decelerated to 4.0 percent in April from 4.1 percent in March, matching economists' predictions.

Following the release of the report, treasury yields demonstrated a sharp decline, providing further reassurance concerning interest rates' outlook.

The market, concerned about inflation, finds respite in the softer jobs report. The lower-than-expected wage growth and job creation indicate an easing in inflation pressure from wages, stated Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance.

Positive market sentiments were bolstered by the earnings report from Apple (AAPL), with the tech behemoth witnessing a 7.0 percent surge. Apple's rally comes in the wake of its superior than expected fiscal second-quarter results and the announcement of a $110 billion stock repurchase.

However, a separate report from the Institute for Supply Management indicated an unexpected contraction in U.S. service sector activity for April, with the services PMI dipping to 49.4 from 51.4 in March. Any reading below 50 signifies a contraction. This marks the sector’s first contraction since December 2022.

In sector news, semiconductor stocks continue to be among the day's top performers, propelling the Philadelphia Semiconductor Index upward by 2.4 percent. Housing stocks have also been strong, reflected by a 1.8 percent gain in the Philadelphia Housing Sector Index. Software and computer hardware stocks, along with brokerage, steel, and retail stocks, are also showing significant strength, helping to fuel the tech-heavy Nasdaq's surge.

Overseas, stock markets across the Asia-Pacific region trended mostly upwards on Friday, with Japan and mainland China markets closed for holidays. The Hang Seng Index in Hong Kong jumped by 1.5 percent, while Australia's S&P/ASX 200 Index increased by 0.6 percent.

Major European markets also saw positive movement. The German DAX Index advanced by 0.6 percent, and both the U.K.'s FTSE 100 Index and the French CAC 40 Index climbed by 0.5 percent.

In the bond market, treasuries receded from their early highs but continue to be in the green zone. Consequently, the yield on the benchmark ten-year note, which has an inverse relationship with its price, is down by 5.7 basis points at 4.514 percent.