Stock Market News for May 6, 2024
Wall Street closed sharply higher on Friday, led by tech stocks. A softer-than-expected jobs report fed fuel to the expectation that a Fed rate cut was on the horizon. All of the three major stock indexes ended in the green.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 450.02 points, or 1.2%, to close at 38,675.68. Twenty components of the 30-stock index ended in positive territory, while 10 ended in negative.
The tech-heavy Nasdaq Composite added 315.37 points, or 2%, to close at 16,156.33.
The S&P 500 advanced 63.59 points, or 1.3%, to close at 5,127.79. All of the 11 broad sectors of the benchmark index closed in the green. The Technology Select Sector SPDR (XLK), the Communication Services Select Sector SPDR (XLC) and the Materials Select Sector SPDR (XLB) gained 2.8%, 1.1% and 1%, respectively.
The fear-gauge CBOE Volatility Index (VIX) decreased 8.1% to 13.49. A total of 10.7 billion shares were traded on Friday, higher than the last 20-session average of 11.1 billion. Advancers outnumbered decliners by a 3.62-to-1 ratio on the NYSE. On the Nasdaq, advancing issues led declining ones by a 2-to-1 ratio.
Jobs Numbers Lead Friday’s Stock Rally
The Bureau of Labor Statistics reported that total nonfarm payroll employment increased 175,000 in April. The payroll number for March was revised up to 315,000 from the previously reported 303,000. Jobs in April were primarily added in the areas of health care, social assistance and transportation and warehousing.
The unemployment rate in April changed little at 3.9% from 3.8% in March. This marked the 27th straight month that unemployment remained below the 4% mark.
Average Workweek decreased to 34.3 in April from the 34.4 reported in March. Average Hourly Earnings increased 0.2% compared with 0.3% rise in April.
The unflinching inflation that has characterized 2024 and a sharp moderation of economic growth have recently fanned fears that the economy may be moving toward stagflation unless inflation is checked. These numbers from the jobs sector act to allay such fears for the time being, with rising optimism that the Fed would take cognizance and go for a September rate cut. Also, market participants were expecting just one rate cut in 2024 before the data was released. They are now expecting a couple.
A weak employment scenario meant an overall boost for the stock market, but tech stocks gained in particular, with their future valuations now looking solid. Consequently, shares of Meta Platforms, Inc. META and NVIDIA Corporation NVDA gained 2.3% and 3.5%, respectively. NVIDIA currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Economic Data
The Institute for Supply Management reported that economic activity in the services sector contracted for the first time in 15 months, coming in at 49.4 for April. The number was 51.4 in March.
Weekly Roundup
The three benchmark indexes closed a second straight week of gains, closing a week in which investor sentiment was boosted by Fed Chair Jerome Powell's dovish statements about the economy and interest rates. The S&P 500, the Dow Jones Industrial Average and the tech-focused Nasdaq Composite advanced 0.6%, 1.1% and 1.4%, respectively.
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