Apple Boosts Share Buyback While Jobs Number Weaker Than Expected

Key Takeaways

• Apple
  Apple
  Earnings Fall But Company Boosts Buyback
• Jobs Numbers For April Weaker Than Forecast
• Hopes Continue For Rate Cut In September

Markets started the day weak on Thursday before turning around to put on an impressive rally. When it was all said and done, the S&P 500 closed higher by 0.9% and the Nasdaq Composite added 1.5%. Companies who already reported earnings, such as Alphabet, Amazon
Amazon
, Microsoft
Microsoft
and Netflix
Netflix
all traded higher. At the same time, companies that won’t report until later this month, like Nvidia, also posted solid gains for the day. After the close, we received good news from Apple that sent index futures higher. Then early this morning, the latest employment report, which was weaker than expected, sent futures significantly higher.

Thursday’s rally came a day after Fed Chairman Powell reassured markets the Fed is still looking at a rate cut possibly later this year. Powell’s statements followed a better-than-expected JOLTs report on Wednesday morning and ahead of today’s employment report. Analysts were calling for 238 thousand new jobs and an unemployment rate of 3.8%. Expectations were that hourly wages grew by 0.3% month-over-month. However, the actual numbers came in far below expectations with 175 thousand new jobs created. The unemployment crept up to 3.9% and average hourly earnings came in slightly weaker than expected, up 0.2%. The numbers seem to bolster a case for a rate cut later in the year. According to the CME, there is currently a better than 60% chance the Fed will cut rates in September.

As investors continue trying to read the tea leaves in each economic report, they are also contending with a slew of earnings. After the close on Thursday, Coinbase
Coinbase
reported better than expected earnings with its first profit in two years. Coinbase is heavily correlated to bitcoin and had been the beneficiary of a strong rally in the crypto space until the recent pullback. The stock, which was up 9% for the day and over 30% for the year, fell by 2% in after-hours trading.

We also heard from Apple after the close. The company reported declining revenues for the fifth time in the past six quarters. Apple has been hit by sluggish iPhone sales, especially in China where mandates against iPhones have taken a toll. iPhone sales fell 10.5% from last year. However, despite the slowing revenues, Apple is sitting on a hoard of cash and the company announced it will put some of that to use. The company announced a $110 billion stock buyback program. Heading into earnings, Apple was up over 2% and then in after-hours, the stock gained an additional 6%.

Other companies making news on Thursday included Paramount
Paramount
Global. Earlier this week, the company released earnings and dismissed CEO Bob Bakish. Then on Thursday, Sony Pictures and Apollo Global Management
Apollo Global Management
submitted a $26 billion all cash offer for the company. Shares of Paramount closed higher by 13% at $13.86.

Shares of Peloton fell 2.8% on Thursday, following the company’s announcement that Barry McCarthy will step down from running the company. McCarthy came in two years ago to try and turn around the struggling company. After having cut thousands of jobs over the past two years, according to The Wall Street Journal, Peloton announced another 400 jobs, or 15% of the workforce would be let go. The stock is indicated to open unchanged in premarket activity.

Taking a look at commodities, oil has been falling of late. After peaking in early April, crude oil prices have since fallen 9%. In that same timeframe, we’ve also seen gold futures fall over 5.5% and silver prices drop 11%. The drop in all three commodities, along with today’s employment report, should help to alleviate some of the worries about resurgent inflation.

For today, markets are looking very strong in premarket. The S&P 500 futures are up over 1% and the Nasdaq 100 futures are higher by over 1.5%. Volatility has fallen 6% with the VIX below 14. Next week is another heavy week of earnings, but most of the big names that have propelled this market have already reported (Nvidia being an exception). The economic calendar is also significantly lighter. Therefore, I wouldn’t be surprised to see markets staying strong today. The earnings thus far, Powell’s comments on Wednesday and today’s employment report are about as good as one could hope. As always, I would stick with your investing plan and long term objectives.

tastytrade, Inc. commentary for educational purposes only. This content is not, nor is intended to be, trading or investment advice or a recommendation that any investment product or strategy is suitable for any person.