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U.S. stocks snap four-game losing streak! Regional bank stocks stormed back, with Apple up nearly 5

2023-05-06 09:34

The three major U.S. stock indexes ended a four-session losing streak with big gains Friday as Apple's stronger-than-expected second-quarter earnings and strong new jobs data eased fears of a U.S. recession.

By the end of the day, the Dow was up 546.64 points, or 1.65%, at 33,674.38. The Nasdaq rose 269.01 points, or 2.25%, to 12,235.41. The S&P 500 rose 75.03 points, or 1.85 per cent, to 4136.25. Among them, the Dow had its biggest daily gain since Jan. 6. Still, the Dow and S&P 500 posted weekly losses of 1.24 percent and 0.8 percent, respectively, while the Nasdaq edged up 0.1 percent for the week.

Regional bank stocks rose

Sectors, the day of the S&P 500 index of 11 major sectors rose. Among them, energy and information technology/technology sectors led the gainers, up 2.75 per cent and 2.71 per cent respectively.

Most of the most popular stocks rose, with the Nasdaq Gold Dragon up 1.04%. Hao Future gained 12.26 per cent, Lufinance Holdings 7.45 per cent, Doodle Intelligence 5.03 per cent, Dada Group 4.68 per cent and Xiaopeng Motor 2.51 per cent.

Apple was the main driver of the broader index, rising 4.7 per cent for its biggest one-day gain since November.

After the bell Thursday, Apple reported earnings for its fiscal 2023 second quarter, which ended April 1. Apple reported revenue of $94.8 billion in its second fiscal quarter, down 3% from the same period last year, versus a consensus of $92.96 billion. The iPhone generated $51.3 billion in revenue, beating analyst expectations by nearly $2.5 billion. The company also announced it would begin a new $90 billion share buyback program over the next year and raise its cash dividend by 4 percent to 24 cents.

A team of jpmorgan analysts led by Steven Alexopoulos upgraded their ratings on several regional banks on Friday, Including Western Alliance, Comerica and Zions Bancorp, saying the stocks appeared to be "badly mispriced" after heavy short selling.

As a result, shares of regional banks stormed back, with Westpac United Bank up 81.7%, Alains West Bank up 49.07%, Zion Bank up 19.22% and Union Bank up 16.69%.

But some analysts said the rebound may not signal a shift in sentiment and could be temporary.

"It's more of a relief rally after a dramatic sell-off," said Sandy Villere, portfolio manager at Villere & Co. He added that the market may also be expecting some sort of government intervention in the sector in the coming days.

The US Labour market remains resilient

U.S. nonfarm payrolls rose a seasonally adjusted 253,000 in April and the unemployment rate hit 3.4 percent in April, Labor Department data showed on Friday. Average hourly earnings rose 4.4 percent in April from a year earlier, after rising 4.3 percent in March. U.S. job growth picked up in April and wage growth was strong, pointing to continued resilience in the labor market that could force the Fed to keep interest rates higher for longer even as it continues to fight inflation.

"Today's market action is driven entirely by the state of the U.S. economy, and the data we've seen today suggests it's in better shape than previously thought." Kristina Hooper, chief global market strategist at Invesco.

In individual stocks, Icahn Enterprises responded to Hindenburg Research's short position report by saying that there are no liquidity issues and that it will pay a first-quarter dividend of $2 per share. In his statement, Icahn said he would respond to Hindenburg's report "in detail" and "vigorously defend public companies and their shareholders." Icahn Enterprises shares closed up 26.7 percent.

Coinbase, the US digital currency exchange, saw its net loss narrow sharply to $79m in the first quarter from $430m a year earlier, helped by cost cuts and a diversification of revenue sources. Coinbase closed up 18.3 percent.

Ride-hailing company Lyft forecast a poor second quarter as price cuts weighed on margins. Lyft shares fell 15% as a result.

Oil prices rose on Friday, but posted their third straight weekly decline. Crude for June delivery rose $2.78, or 4.05 percent, to settle at $71.34 a barrel. Brent crude for July delivery settled up $2.80, or 3.86 percent, at $75.30 a barrel. Brent crude futures are down about 5.3 percent for the week, while U.S. crude futures have tumbled 7.1 percent.

Gold retreated after strong U.S. jobs data dampened expectations of a Federal Reserve rate cut. Gold for June delivery, the most actively traded contract on the New York Mercantile Exchange, fell $30.9, or 1.5 percent, to settle at $2,024.8 an ounce.

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