[New York Stock Market] Rising Amid 'Dovish Powell'... Awaiting April Employment Report

Focus on Apple Earnings and Employment Report

The three major indices of the U.S. New York stock market closed higher on the 2nd (local time). Investors, relieved by Federal Reserve (Fed) Chair Jerome Powell's dismissal of the possibility of a rate hike the previous day and his more dovish-than-expected remarks (favoring monetary easing), are awaiting corporate earnings including Apple’s and the U.S. Labor Department’s employment report.

On that day at the New York Stock Exchange (NYSE), the blue-chip-focused Dow Jones Industrial Average closed at 38,225.66, up 322.37 points (0.85%) from the previous trading day. The large-cap-focused S&P 500 index rose 45.81 points (0.91%) to 5,064.2, and the tech-heavy Nasdaq index gained 235.48 points (1.51%) to close at 15,840.96.

By individual stocks, U.S. semiconductor company Qualcomm rose 9.74% after reporting earnings that exceeded expectations. The previous day, Qualcomm announced second-quarter fiscal year revenue of $9.39 billion and adjusted earnings per share (EPS) of $2.44, surpassing LSEG analysts’ estimates of $9.34 billion and $2.32, respectively. Used car sales platform Carvana surged 33.79% after reporting record-high earnings. Pharmaceutical company Moderna rose 12.68% after reporting smaller losses than market expectations. Restaurant delivery service DoorDash fell 10.32% following earnings that missed market forecasts.

Technology stocks also rose as Treasury yields declined. Nvidia and Amazon increased by 3.34% and 3.2%, respectively. Apple, which reported earnings after the market close, rose 2.2% during regular trading hours.

At the Federal Open Market Committee (FOMC) meeting held for the third time this year the previous day, the Fed kept the federal funds rate unchanged for the sixth consecutive time at 5.25-5.5%. The Fed’s policy statement newly included language indicating no progress in slowing inflation. The market focused on Chair Powell’s press conference immediately following the release of the FOMC policy statement. Powell said, "It will take longer than expected to gain confidence that inflation is on a sustainable path toward 2%," but dismissed the possibility of a rate hike. He stated, "The likelihood that the next policy rate move will be an increase is low. I want to say it is very unlikely." The market was relieved by Powell’s more dovish-than-expected remarks.

On Wall Street, Powell’s remarks were assessed as less hawkish (favoring monetary tightening) than expected. Citibank said, "Powell judged the current rate as sufficiently restrictive," and concluded, "Ultimately, rate cuts will come." Evercore IS noted, "It was less hawkish than feared," adding, "The timing of rate cuts has been delayed, not withdrawn."

The employment data released that day confirmed that the U.S. labor market remains robust. According to the U.S. Labor Department, initial jobless claims for the week of April 21-27 totaled 208,000, below the expert forecast of 212,000 and unchanged from the previous week’s 208,000. Compared to the pre-COVID-19 pandemic period, this remains historically low.

Market attention is now turning to the April employment report. The U.S. Labor Department’s April employment report, to be released the following day, provides a more accurate picture of the U.S. labor market. The market expects nonfarm payrolls to increase by 243,000 in April, a significant decrease from March’s 303,000 increase. The April unemployment rate is expected to remain steady at 3.8%.

Anthony Scaglione, Chief Market Strategist at Ameriprise, analyzed, "Employment remains strong, but if we receive a report showing nonfarm payrolls lower than last month’s figure, stocks are likely to be well positioned."

Bond yields are declining. The U.S. 2-year Treasury yield, sensitive to monetary policy, fell 5 basis points (1 bp = 0.01 percentage points) from the previous trading day to 4.88%, while the U.S. 10-year Treasury yield, a global bond yield benchmark, edged down to around 4.58%.

International oil prices closed steady. West Texas Intermediate (WTI) crude oil fell $0.05 (0.1%) to $78.95 per barrel from the previous trading day, while Brent crude, the global oil price benchmark, rose $0.23 (0.3%) to $83.67 per barrel.