The major U.S. equity indexes muscled higher Thursday morning, regaining some ground after a choppy stretch of trading as investors sorted through the latest employment figures and braced for a crucial earnings report from tech titan Apple after the bell.
The Dow Jones Industrial Average jumped around 60 points, or 0.2%, aided by gains in economically-sensitive stocks like Boeing and Caterpillar. The benchmark S&P 500 ticked up 0.1%, while the tech-concentrated Nasdaq Composite led the advance, surging 0.3% as traders scooped up shares of heavyweight technology companies.
The moves higher came after the government’s weekly snapshot of jobless claims showed a modest uptick in the number of Americans filing for first-time unemployment benefits last week. However, the data landed relatively in line with expectations on Wall Street, offering little by way of surprises.
According to the Labor Department, initial jobless claims for the week ended April 27 totaled 208,000, up slightly from the prior week’s revised level of 207,000. Analysts surveyed by Refinitiv had forecast claims would rise to 211,000.
So while jobless claims crept higher, the underlying trend still points to a red-hot labor market that remains extremely tight, with job openings far exceeding hiring levels in recent months. The increase could signal nascent cracks appearing in employment conditions as the Federal Reserve’s aggressive interest rate hike campaign to cool economic demand hits home.
“The labor market remains exceedingly strong, with abundant job vacancies and elevated wage growth that have contributed to stubbornly high inflation,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. “But the cumulative effects of tighter monetary policy should gradually slow labor demand and help relieve some of the tightness over time.”
For now, with the job market still scorching hot, that gives the Fed little reason to pause its rate hiking cycle aimed at quashing the worst inflation outbreak in four decades. Traders currently see a roughly 80% probability the U.S. central bank will raise its benchmark interest rate by another quarter point at its meeting later this month.
While the Fed does want to see the labor market loosen to help relieve wage pressures fueling inflation, policymakers are also trying to engineer a so-called “soft landing” where economic activity slows in a controlled manner without tipping the economy into a severe recession.
So while Thursday’s jobs data may have done little to shift the broader economic narrative, traders were also closely monitoring a bevy of corporate earnings results pouring in as they try to gauge the underlying strength of American businesses.
Taking center stage was Apple, with the iPhone maker scheduled to report fiscal second-quarter earnings after the market’s close. Wall Street analysts expect the consumer technology powerhouse to reveal quarterly profits of $1.50 per share on revenues of $90.3 billion for the three months ended in March.
All eyes will be on Apple’s performance in its core iPhone business, with signs of weakening consumer demand, particularly in China – a critical growth market for the company. But the tech juggernaut’s rapidly-growing services segment, which includes offerings like Apple Music, iCloud storage and the App Store, has emerged as a potential bright spot.
Shares of Apple traded up around 1% ahead of the eagerly-anticipated quarterly release, boosting the performance of the Nasdaq. Other notable movers included video delivery platform DoorDash, with the stock plunging more than 9% after a disappointing earnings report.
Online marketplace eBay also came under heavy selling pressure, tumbling over 2% after its results failed to inspire investors. But providing a counterweight was battered used car retailer Carvana, with the stock skyrocketing 37% at the open after the company posted a surprise profit and better-than-expected sales figures for the first three months of 2023.
The electric surge in Carvana’s share price highlighted the premium investors are placing on any companies able to produce solid financial results and upbeat forecasts despite the broader economic turmoil and uncertainty hanging over markets. With recession fears looming, traders are lavishing rich valuations on any names demonstrating resilience and an ability to navigate the turbulent macro backdrop.
Elsewhere, semiconductor giant Qualcomm saw its stock rocket 7% higher after the chipmaker delivered better-than-expected profits and an upbeat sales forecast. Helping boost optimism, management cited continued strength in demand for chips that power smartphone hand.
