S&P 500 and Nasdaq Soared 2%, Apple and Regional Banks Zoom Higher

Barry Adams
05 May, 2023
New York City

Stocks rebounded and accelerated gains after regional banks soared and non-farm payrolls expanded in April. 

Benchmark indexes soared as much as 2% and regional banks reversed weeklong losses on the optimism that the Fed is ready to pause at the next meeting. 

Despite the market rebounded today, mark-to-market losses for Treasury securities are likely to resurface as the interest rates remain elevated. 

Regional banks suffered heavy losses this week on the worries that more banks may suffer the fate of failed Signature Bank. First Republic Bank and Silicon Valley Bank. 

Western Alliance Bancorp zoomed 50% to $27.31, Zions Bancorp increased 18.2% to $23.61 and PacWest Bancorp catapulted 79% to $5.70. 

Investors welcomed the hotter-than-expected non-farm payrolls additions in April and interpreted that the resilient labor market may help the Fed in navigating the economy to soft landing as policymakers tackle elevated inflation. 

Non-farm payrolls expanded in April and jobless rate dropped to five-decade low after professional and business services, health care and leisure and hospitality led the additions. 

 

Payrolls Additions Expanded in April 

The U.S. economy accelerated net new jobs in April, the U.S. Bureau of Labor Statistics reported Friday. 

Non-farm payrolls increased 253,000 in April after the economy added downwardly revised 165,000 in March. 

Job additions in March were sharply lowered from the initial estimate of 236,000. 

Both the unemployment rate, at 3.4%, and the number of unemployed persons, at 5.7 million, changed little in April. 

The unemployment rate has ranged from 3.4% to 3.7% since March 2022 and dropped to a five-decade low in April and matched the level in February. 

Both the labor force participation rate, at 62.6%, and the employment-population  ratio, at 60.4%, were unchanged in April and remained below their  pre-pandemic February 2020 levels of 63.3% and 61.1%, respectively. 

In April, employment in professional and business services increased 43,000, in health care increased 40,000 and leisure and hospitality by 31,000. 

In April, average hourly earnings for all employees on private nonfarm payrolls  rose by 16 cents, or 0.5%, to $33.36 and extended annual wage gains to 4.4%.  

 

U.S. Indexes & Yields 

The S&P 500 index jumped 1.5% to 4,140.39 and the Nasdaq Composite 2.3% to 12,245.86. 

The yield on 2-year Treasury notes hovered at 3.86%, 10-year Treasury notes edged down to 3.44% and 30-year Treasury bonds held at 3.79%. 

Crude oil rose $3.12 to $71.78 a barrel and natural gas prices fell 1 cent to $2.08 a thermal unit. 

 

U.S. Stock Movers 

Apple Inc increased 4.8% to $173.75 after the maker of popular electronics gadgets reported higher-than-expected sales and earnings. 

Expedia Group Inc soared 4.1% to $92.82 after the online travel booking platform reported record first quarter revenue and gross bookings soared 20%. 

Carvana Company soared 26% to $9.10 after the online used car dealer reported a smaller-than-expected quarterly loss. 

DoorDash Inc decreased 0.7% to $62.35 after the online delivery platform lifted its annual outlook and the company said demand for its services remained strong. 

Lyft Inc plunged 22.8% to $8.34 after the ride-hailing company reported a larger-than-expected loss despite healthy demand for its services. 

Bumble Inc jumped 1.7% to $17.95 after the online dating app operator reported strong activities on its platform. 

DraftKings Inc jumped 15.9% to $24.71 after the sports betting company lifted its annual outlook on the back of a strong increase in its quarterly revenue. 

 

European Markets Rebounded

European stock markets rebounded on the final day of the week and major indexes are set to close down after a week of volatile trading.

Investors shifted focus to corporate earnings after a busy week of economic data and central banks actions.  

In the region's economic news, retail sales dropped in March after higher food prices and elevated energy costs sapped consumer spending. 

German factory orders dropped to a three-year low after volatile transportation and defense orders fell sharply in March after surging in February. 

 

Eurozone Retail Sales Dropped 

The Euro Area retail sales decreased 1.2% in March from the previous month and eased 1.1% in the European Union, Eurostat reported Friday. 

Seasonally adjusted retail sales dropped at a faster pace than 0.2% in February after higher food prices and interest rates weighed on the overall spending. 

Across the Eurozone, retail sales dropped 2.4% in Germany, 1.4% in France, 0.3% in Italy but rose 0.7% in Spain.  

On an annual basis, the calendar adjusted retail sales index decreased 3.8% in the euro area and 4.1% in the European Union.

 

Germany Factory Orders Drop to 3-year Low On Volatile Large Orders 

German new factory orders, adjusted for prices and season factors, plunged 10.7% from the previous month in March, the Federal Statistics Office or destatis reported Friday. 

February orders were downwardly revised to an increase of 4.5%. 

The March orders declined the most since the peak of the coronavirus pandemic in April 2020, driven by a sharp decline of 47.4% in miscellaneous vehicle construction which includes orders for ships, rail locomotives, spacecrafts and army vehicles. 

Large-scale orders had risen 55% in February from the previous month. 

Excluding large-scale transportation and defense orders, new orders declined 7.7% in March from the previous month. 

While new orders in the capital goods sector decreased 14.1% and in the intermediate goods area 7.5% in March 2023 compared to the previous month, new orders in the consumer goods sector increased 1.2%. 

Preliminary real turnover in the manufacturing sector declined 2.9% in February after rising 1.5% in February, but rose 3.7% from a year ago. 

 

Europe Indexes & Yields 

The DAX index increased 1.4% to 15,961.02,  the CAC-40 index added 1.3% to 7,432.93 and the FTSE 100 index advanced 1.0% to 7,778.38. 

The yield on 10-year German Bunds inched up to 2.26%, French bonds traded slightly higher to 2.87%, the UK gilts inched higher to 3.76% and Italian bonds advanced to 4.19%.

The euro edged higher to $1.102, the British pound to $1.267 and the Swiss franc to 89.13 cents.

Brent crude rose $2.32 to $75.34 a barrel and the Dutch TTF natural gas increased €0.92 to €36.57 per MWh.

 

Europe Stock Movers 

Adidas AG increased 7.3% to €167.86 after the German sportswear maker reported quarterly results ahead of expectations. 

IAG or International Consolidated Airlines Group increased 1.7% to 149.55 pence after the parent of British Air and Iberian Air narrowed its first quarter pre-tax loss. 

The airline group also lifted its full-year 2023 adjusted operating earnings outlook. 

Air France KLM SA decreased 1.7% to  €1.43 after the airline group reported a first quarter loss of €306 million. 

SGL Carbon SE declined 0.6% to €8.75 after the company forecasted flat sales in 2023 compared to the previous year. 

Intercontinental Hotels Group decreased 1.5% to 5,432.0 pence after the company said group chief executive Keith Barr plans to step down from the office and resign from the company board. 

In addition, the company said its annual 2023 revenues are likely to exceed its previous estimate. 

Halma plc declined 0.1% to 2,385.0 pence and the company agreed to acquire Poland-based Sewertronics for as much as €59 million or £52 million.