Stocks Shrug Off Mixed Data, Rally Ahead of Key Jobs Report

The markets were on a wild ride Thursday as investors digested a slew of economic data and corporate earnings. Stocks trended higher in the overnight and European sessions, shrugging off some brief jitters from hotter-than-expected Unit Labor Costs and lower-than-forecast Initial Jobless Claims. All eyes are now on Friday’s Nonfarm Payrolls (NFP) report and Apple (AAPL) earnings after the bell.

The economic data sparked some downsides in treasuries and upsides in the U.S. dollar, but those moves faded as the session wore on. The front end of the Treasury curve led the rebound, with the 2-year yield taking out Wednesday’s post-FOMC highs. Meanwhile, the Russell 2000 and Nasdaq led the charge higher for stocks, though the S&P 500 and Dow also notched solid gains.

Most sectors closed in the green, except for Healthcare and Materials.

In the forex world, the Japanese Yen and Swiss Franc were the standout performers. The Yen continued to benefit from suspected intervention by the Bank of Japan (BoJ) on Wednesday night, as well as the dovish tone from the Fed. The Swissy got a boost from hotter-than-expected inflation data. The Australian and Canadian Dollars also did well, thanks to the risk-on vibes.

Crude oil prices ultimately settled flat after a choppy session. Early strength faded in the afternoon on optimistic updates about a potential ceasefire deal with Hamas. A Bloomberg survey showed 87% of respondents expect OPEC+ to extend output cuts into the year’s second half.

In corporate news, Regeneron Pharmaceuticals (REGN) ended 4% higher despite mixed earnings, while Qualcomm (QCOM) surged 9.5% on strong results. eBay (EBAY)DoorDash (DASH), and Etsy (ETSY) all sold off on disappointing guidance. Carvana (CVNA) was the big winner, skyrocketing 33.5% after crushing earnings estimates.

Media giants were also in focus, with Paramount (PARA) jumping 13% on reports that Sony (SONY) and Apollo (APO) are interested in buying the company for $26 billion. Nordstrom (JWN) gained 6% on chatter that Sycamore Partners is among the private equity firms looking to take the retailer private.

Looking Ahead

So what’s next for markets? Friday’s NFP report will be crucial – economists expect job growth to slow and wages to cool in April, but the unemployment rate is seen holding steady. Any big misses could bolster bets on Fed rate cuts later this year.

Next week brings a lighter economic calendar, but the Treasury’s quarterly refunding auctions will be in focus:

  • $58 billion in 3-year notes on May 7th
  • $42 billion in 10-year notes on May 8th
  • $25 billion in 30-year bonds on May 9th

A parade of Fed speakers, including Barkin, Williams, Kashkari, Cook, and Goolsbee, is also on tap. After Chair Powell’s dovish presser, their comments will be closely parsed for clues on the rate outlook.

The Bottom Line

Buckle up, folks – it’s shaping up to be another eventful stretch for markets. While the Fed may be nearing the end of its hiking cycle, the tug-of-war between inflation and growth concerns is far from over. The key is to stay nimble and not get too caught up in the day-to-day noise.

Easier said than done, I know!

As always, make sure you’re staying diversified and not taking on more risk than you can stomach. And don’t forget to take a break from the screens every once in a while – your mental health (and probably your portfolio) will thank you. Happy investing!

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