U.S. stocks moved higher on Thursday in a quiet period after the Fed Day rush, as investors put aside interest rate concerns for now to focus on Apple’s (AAPL) earnings and its upcoming monthly jobs report.
The S&P 500 (^GSPC) rose about 0.5%, while the Dow Jones Industrial Average (^DJI) rose 0.6%. The tech-heavy Nasdaq Composite (^IXIC) led the gains, up 0.9%.
Stocks are recovering from Wednesday’s volatile session, which was dominated by the wait for the Federal Reserve’s policy decision. Chairman Jerome Powell downplayed the likelihood of a rate hike, bringing relief to investors worried that recent signs of “sticky” inflation could lead to that move.
Read more: What the Fed’s interest rate decision means for bank accounts, CDs, loans and credit cards
As Powell once again emphasized that the Fed still depends on data to shape its thinking, the April jobs report due Friday is receiving a lot of attention. Wall Street is watching for signs of cracks in the strong labor market story, a key factor for policymakers.
Meanwhile, the OECD has identified US outperformance as the reason the global economy is growing faster than expected, providing another reason for optimism.
In terms of earnings, the most important is Apple’s quarterly results, which are expected after market close on Thursday. Wall Street is bracing for a decline in sales and a potentially sharp decline in iPhone sales in China. But there could be some potential bright spots for the “Magnificent Seven” megacap in its results.
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Technology stocks rise, semiconductors lead in profits
Semiconductor stocks were among the biggest gainers in the technology sector on Thursday. The Information Technology Sector Select ETF (XLK) rose more than 1% during trading.
AI darling Nvidia (NVDA) rose more than 2%, while Qualcomm (QCOM) rose more than 10% after the semiconductor company’s better-than-expected revenue forecast. Chipmaker equipment manufacturer ASML (ASML) rose more than 2%.
Bitcoin recovers to $59,000 after record outflows from ETFs
Bitcoin (BTC-USD) rose more than 3% on Thursday, hovering above $59,000, following record daily outflows from spot bitcoin exchange traded funds (ETFs).
The cryptocurrency fell below $57,000 on Wednesday as investors withdrew a net $564 million from spot bitcoin ETFs, according to Bloomberg data.
The cryptocurrency has recently been on a downward trend, falling for three consecutive days prior to Thursday’s rebound.
Carvana rises 34% on surprise profit
Shares of Carvana (CRVN) rose 34% on Thursday after the online car platform posted a surprise profit for the latest quarter.
The company reported an adjusted quarterly profit of $0.23, compared to expectations of a loss of $0.80. Revenue came in at $3.06 billion, above Wall Street estimates of $2.76 billion.
The company also posted a record gross profit per unit (“GPU”) of $6,432, or $2,129 higher than last year.
Shares were hovering around $120 each in early trading Thursday. The stock is up about 143% this year.
Stocks rise after the Fed holds rates steady and Apple’s profits hang in the balance
Stocks rose Thursday morning after a volatile trading session on Wednesday following the Federal Reserve’s policy decision.
The S&P 500 (^GSPC) rose about 0.6% at the open. The Dow Jones Industrial Average (^DJI) rose 0.5%. The tech-heavy Nasdaq Composite (^IXIC) led the gains, up 0.8%.
On Wednesday, the Federal Reserve kept interest rates unchanged. Fears of a possible rate hike instead of cuts had recently crept into the markets. Investors were reassured by comments from Fed Chairman Jerome Powell that the central bank was unlikely to raise interest rates.
As for earnings, Apple (AAPL) will report this afternoon. Shares of the iPhone maker opened roughly 1.5% higher on Thursday.
Take your macro notes to Apple’s earnings call tonight
Most investors are preparing for a soft quarter from Apple (AAPL) this afternoon.
That’s why shares are down 12% so far this year, versus a 5% gain for the S&P 500.
A lot of attention is paid to the impact of the economic challenges in the US and China on the mighty Apple. If these challenges prove to be more of a sales problem, investors might refrain from getting too ecstatic about the inevitable AI earnings talk.
Useful point from JP Morgan analyst Samik Chatterjee:
“Sentiment (towards Appl) has improved despite tough data points as the focus has shifted to owning the potential AI upgrade cycle; However, the coming earnings pressures will still be important to investors in providing insight into the extent of the cyclical challenges from depressed consumer profits. spending and headwinds related to market share moderation in China.”
Reducing interest rate hikes by the Fed
The Street is singing in unison this morning about a growing narrative in the markets: the Fed could actually raise rates this year to finally bring inflation back to its 2% target.
That song is that pigs have a better chance of flying than the Fed raising rates.
Good point about all this from Mike O’Rourke of Jones Trading this morning after Wednesday’s Fed decision:
‘The fear that Chairman Powell would put interest rate hikes back on the table was ridiculous. If there was ever a straw man catalyst for a rally, this was it. The speculation was as pointless as the belief at the beginning of the year that the FOMC would cut interest rates six times this year. There was nothing in the data or Fed commentary to support such easing speculation, but somehow it became the consensus view and was effectively priced into the markets. Chairman Powell has repeatedly made it clear that there would be inflation. The FOMC is resilient and will keep interest rates stable for as long as necessary to keep inflation under control. In addition to the risk of too much tightening if slowing economic data emerge, there are also elections in six months. The most obvious thing is that this is a guy who took the Fed’s balance sheet from $4 trillion four years ago to $9 trillion, and today he said he’s scaling back normalization to $7.4 trillion. Chairman Powell is only aggressive when he has no other choice, and right now inflation is keeping him in check. Aggressively raising interest rates with a one-year delay does not make inflation difficult.”
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