Closing Stock Market SummaryThe stock market closed out the first week of May on an upbeat note. The major indices were showing decent strength right out of the gate, held onto those gains and traded somewhat sideways until about 1:00 p.m. ET when the rally built up momentum. The late afternoon move higher brought the S&P 500 just shy of the 4,150 level before pulling back somewhat by the close.
Today's upside bias was driven by a nearly 5.0% gain in Apple (AAPL 173.57, +7.78, +4.7%) following its pleasing earnings report and capital return plan, along with a solid rebound effort in the regional bank stocks. Standouts in that regard included PacWest (PACW 5.76, +2.59, +81.7%) and Western Alliance (WAL 27.16, +8.96, +49.2%), which had been at the center of recent turmoil before logging outsized gains today, boosted by some short-covering activity.
The SPDR S&P Regional Bank ETF (KRE) jumped 6.3% and the S&P 500 financials sector closed near the top of the leaderboard among the 11 sectors with a 2.4% gain. Other top performing sectors included the energy (+2.8%) and information technology (+2.7%) sectors. The latter was boosted by Apple along with a nice gain in Microsoft (MSFT 310.65, +5.24, +1.7%), which hit a new 52-week high today.
Strength from the regional bank stocks and energy shares contributed to the outperformance of the Russell 2000 (+2.3%).
Market participants were also digesting the April employment report, which was good enough to engender some thoughts that a soft landing for the economy may still be possible despite the Fed's aggressive rate hikes.
Treasury yields rose sharply in response to the employment report and the improved price action in the bank stocks, which led to some unwinding of safety trades. The 2-yr note yield rose 18 basis points to 3.91% and the 10-yr note yield rose 10 basis points to 3.45%.
At the same time, the CBOE Volatility Index moved sharply lower, down 14.7% or 2.95 to 17.14.
- Nasdaq Composite: +16.9% YTD
- S&P 500: +7.7% YTD
- Dow Jones Industrial Average: +1.6% YTD
- S&P Midcap 400: +1.3% YTD
- Russell 2000: -0.1% YTD
Reviewing today's economic data:
- Nonfarm payrolls grew by 253,000 in April (consensus 180,000) following a revised increase of 165,000 in March (from 236,000). Nonfarm private payrolls grew by 230,000 in April (consensus 160,000) after a revised increase of 123,000 in March (from 189,000).
- The unemployment fell to 3.4% in April (consensus 3.6%) from 3.5% in March.
- The average work week was unchanged in April at 34.4 hours (consensus 3.6%). Average hourly earnings increased by 0.5% (Briefing.com consensus 0.3%) after an increase of 0.3%.
- The key takeaway from the report is that it substantiates why the Fed isn't inclined to cut rates soon, but at the same time the continued strength in the labor market after nine rate hikes (the 10th rate hike came after the data for April were collected) lends some hope to the idea that a soft landing for the economy is still possible.
Looking ahead to Monday, market participants will receive the Wholesale Inventories report for March (consensus 0.1%; prior 0.1%).
Tyson Foods (TSN), DISH Network (DISH), Viatris (VTRS), KKR (KKR), and BioNTech (BNTX) are among the more notable companies reporting earnings.
