Bargain Hunting, Apple Earnings Lead To Significant Rebound On Wall Street

Stocks moved sharply lower higher during trading on Friday, regaining ground after trending lower over the past several sessions. The major averages all showed significant moves back to the upside, with the Dow bouncing off its lowest closing level in over a month.

The major averages pulled back off their best levels going into the close but still posted strong gains. The Dow jumped 546.64 points or 1.7 percent to 33,674.38, the Nasdaq spiked 269.01 points or 2.3 percent to 12,235.41 and the S&P 500 surged 75.03 points or 1.9 percent to 4,136.25.

Following the rebound on the day, the major averages turned in a mixed performance for the week. While the tech-heavy Nasdaq crept up by 0.1 percent, the S&P 500 slid by 0.8 percent and the Dow slumped by 1.2 percent.

The rally on Wall Street partly reflected bargain hunting, as some traders looked to pick up stocks at reduced levels following recent weakness.

The major averages had closed lower for four consecutive sessions, with the Dow ending Thursday’s trading slightly lower for 2023.

Regional banks helped lead the recovery after ongoing concerns about turmoil in the sector weighed on the markets in recent sessions.

PacWest Bancorp (PACW) skyrocketed by 81.7 percent after plummeting by 50.6 percent to a record closing low on Thursday.

Western Alliance (WAL), Zions Bancorp (ZION) and Comerica (CMA) also posted standout gains after JPMorgan upgraded the stocks to Overweight, saying they appear “substantially mispriced.”

A positive reaction to quarterly results from tech giant Apple (AAPL) also contributed to the rebound on Wall Street.

Shares of Apple jumped by 4.7 percent after the company reported fiscal second quarter results that beat analyst estimates on both the top and bottom lines.

Traders were also reacting to the release of the Labor Department’s closely watched monthly jobs report for April.

While the report showed job growth far exceeded economist estimates in the month of April, the jump in employment followed notable downward revision to the two previous months.

The Labor Department said non-farm payroll employment shot up by 253,000 jobs in April compared to economist estimates for an increase of about 179,000 jobs.

However, the job growth in February and March was downwardly revised to 248,000 jobs and 165,000 jobs, respectively, reflecting a combined downward revision of 149,000 jobs.

The report also said the unemployment rate edged down to 3.4 percent in April from 3.5 percent in March. Economists had expected the unemployment rate to remain unchanged.

“The report doesn’t change our view that the Fed will hold rates steady in June,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics. “However, the Fed’s pause was a hawkish one, and if job growth and earnings don’t moderate from the April pace, rate hikes could be back in play.”

She added, “We expect job growth will slow as the economy enters a mild recession as cumulative rate hikes and a tightening in lending standards weigh on the economy and the labor market in the second half of the year.”

Sector News

Reflecting the rebound by banking stocks, the KBW Bank Index spiked by 4.6 percent after ending Thursday’s session at its lowest closing level in over two years.

Substantial strength was also visible among brokerage stocks, as reflected by the 3.9 percent surge by the NYSE Arca Broker/Dealer Index. The index bounced off a more than six-month closing low.

Steel stocks also showed a significant move back to the upside following recent weakness, driving the NYSE Arca Steel Index up by 3.5 percent.

Energy stocks also rebounded along with the price of crude oil, moving notably higher along with airline, semiconductor and computer hardware stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Friday, with markets in Japan and South Korea closed for holidays. China’s Shanghai Composite Index fell by 0.5 percent, while Hong Kong’s Hang Seng Index rose by 0.5 percent.

Meanwhile, the major European markets all showed strong moves to the upside on the day. While the U.K.’s FTSE 100 Index jumped by 1.0 percent, the French CAC 40 Index and the German DAX Index surged by 1.3 percent and 1.4 percent, respectively.

In the bond market, treasuries saw a significant pullback after moving sharply higher over the three previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 9.5 basis points to 3.446 percent.

Looking Ahead

Reports on consumer price and producer price inflation are likely to be in focus next week, as traders look for additional clues about the outlook for interest rates.

The latest earnings news is also likely to attract attention, with a slew of big-name companies due to report their quarterly results next week.

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