Markets rally as job growth slows in April

Dow shot up 362, advancers over decliners 5-2 & NAZ advanced 265.  The MLP index crawled up 1 to the 279s & the REIT index was up 2+ to the 363s.  Junk bond funds traded higher & Treasuries were bought which lowered yields.  Oil slid lower in the 78s & gold was off 6 to 2302.

AMJ (Alerian MLP Index tracking fund)

US job growth slowed notably in Apr while the unemployment rate unexpectedly rose, a sign that high interest rates & stubborn inflation are starting to weigh on the labor market.  Employers added 175K jobs in Apr, the Labor Dept said in its monthly payroll report, missing the 243K gain.  It marked the worst month for job creation since Oct.  The unemployment rate, meanwhile, inched higher to 3.9% against expectations that it would hold steady at 3.8%.  Wage growth was also more subdued last month, with average hourly earnings, a key measure of inflation, rising 0.2%, less than expected.  On an annual basis, wages increased 3.9% in Apr.  It marked the worst month for job creation since Oct.  The unemployment rate, meanwhile, inched higher to 3.9% against expectations that it would hold steady at 3.8%.  The surprisingly weak report paints a picture of a job market that is beginning to sputter as the result of the Federal Reserve's aggressive interest-rate hike campaign & boosts the odds of rate cuts sooner rather than later.  All 3 major stock indices soared at the market's opening.  Fed policymakers voted Wed to hold interest rates steady at the highest level since 2001 & signaled they will remain in wait-&-see mode on rate reductions after a string of hot inflation reports at the beginning of the year.  Chair Jerome Powell ruled out the likelihood of additional rate hikes this year & signaled the Fed is ready to act should there be an "unexpected weakening" in the labor market.  "It would have to be meaningful and get our attention and lead us to think that the labor market was really significantly weakening for us to want to react to it," he added.  "A couple of tenths [percentage points] in the unemployment rate would probably not do that."

US economy adds 175K jobs in April, much weaker than expected

A 10% decline in iPhone sales sounds like a problem for Apple (AAPL), a Dow stock, considering the company counts on the devices for half its revenue.  But investors didn't seem to mind, when AAPL revealed the year-over-year drop in its fiscal 2nd-qtr earnings report.  Instead of glaring too much at iPhone revenue, traders chose to focus on the positive.  Gross margin expanded to 46.6%, continuing an upward trajectory that reflects the company's growing services business, which brings with it stout profits.  AAPL also signaled overall revenue growth in the current qtr will be in the low single digits, after a 4% decline in the 2nd period.  The forecast was looking for 3rd-qtr growth of 1.3%.  Perhaps the biggest catalyst for the pop was AAPL's announcement that it had approved $110B of share buybacks, the most ever for a public company.  For the past 3 years, AAPL has authorized $90B in annual repurchases.  “Our free cash flow generation has been very strong over the years, particularly the last few years,”  CFO Luca Maestri said.  AAPL said iPhone sales suffered from a difficult comparison to last year, when sales were elevated after previous shortages.  Still, investors are looking for future iPhone growth & many analysts say a potential iPhone with artificial intelligence features could do the trick & help the company snag customers from Android.  Annual iPhone revenue peaked in its fiscal 2022.  While AAPL provided some guidance for total revenue, it avoided offering any sort of forecast for iPhone sales.  The stock jumped 11.47 (6%).

Apple’s falling iPhone sales don’t bother Wall Street so long as margins, buybacks are increasing

Block (SQ) reported first-qtr earnings that exceeded estimates.  SQ formerly known as Square, posted $2.09B in gross profit, up 22% from a year ago.  Analysts tend to focus on gross profit as a more accurate measurement of the company's core transactional businesses.  EPS of 74¢, more than quadruple EPS of 16¢ a year earlier.  The company raised its adjusted EBITDA forecast for the 2nd qtr to $690M from $670M.  The Cash App business, which is the company's popular mobile payment platform, reported $1.26B in gross profit, a 25% year-over-year jump.  Its Cash App Card monthly active users increased to 24M in Mar.  SQ ended the year with 57M monthly transacting actives for Cash App in Mar, up 6% year over year.  Inflows per transacting active were $1255, up 11% year over year.  SQ is also more focused on integrating Afterpay, the buy now, pay later company it bought for $29B in 2021.  Afterpay struggled following the deal, posting big losses.  CFO Amrita Ahuja said that the company is raising its outlook for the year to reflect its strong performance in the first qtr.  At the opening the stock traded much higher, but slipped back to only an 88¢ gain

Block shares jump on better-than-expected first-quarter results

The bulls liked the report on jobs growth & are hoping for more rate cuts this year.  AAPL's report added fuel to the market rally.

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