Friday, 3 May 2024

Stock Market Today: Stocks gain as Powell nixes rate hikes; Apple on deck

by BD Banks

Check back for updates throughout the day

U.S. stocks moved higher Thursday, while the dollar slipped against its global peers and Treasury yields steadied, 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.

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.

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.

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.” 

Source: Challenger Gray

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.”

Apple will post earnings after the close of trading Thursday, with investors looking for a big drop in iPhone sales. 

Mario Tama/Getty Images

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:

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

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