Stock market today: Stocks climb as Fed rate-hike fears fade, with Apple on deck

US stocks strode higher Thursday in a calm after the Fed day storm, as investors set aside rate worries for now to focus on Apple (AAPL) earnings and the coming monthly jobs report.

The S&P 500 (^GSPC) rose roughly 0.9%, while the Dow Jones Industrial Average (^DJI) gained about 0.8%. The tech-heavy Nasdaq Composite (^IXIC) led the gains, up 1.5%.

Stocks are recovering from Wednesday's volatile session dominated by the wait for the Federal Reserve's policy decision. Chair Jerome Powell played down the likelihood of an interest-rate hike, bringing relief to investors worried that recent signs of "sticky" inflation might prompt that move.

Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards

As Powell again stressed the Fed is still depending on data to shape its thinking, the April jobs report due Friday is in full focus. Wall Street is watching for any signs of cracks in the strong labor market story, a key factor for policymakers.

Meanwhile, the OECD credited US outperformance as the reason the global economy is growing faster than expected, providing another reason for optimism.

After hours, Apple stocked moved higher by as much as 6% the company reported better than expected earnings per share and revenue for the prior quarter. The company also announced it was authorizing an additional $110 billion for share repurchases and increased its dividend to $0.25 per share.

LIVE COVERAGE IS OVER14 updates

Apple shares rise as company raises dividend, announces share buyback

Thu, May 2, 2024 at 4:42 p.m. EDT, Josh Schafer

Apple (AAPL) stock rose more than 3% in after-hours trade after the company reported better-than-expected quarterly results, increased its dividend by $0.25, and announced plans to authorize a $110 billion share repurchase program.

Yahoo Finance's Dan Howley reports:

Apple's Greater China revenue slid 8% year over year to $16.37 billion, though that was better than the $15.87 billion analysts were expecting. The company's all-important iPhone revenue topped out at $45.96 billion, down from $51.33 in Q2 last year.

Overall, Apple reported earnings per share (EPS) of $1.53 on revenue of $90.8 billion. Wall Street was anticipating EPS of $1.50 on revenue of $90.3 billion, according to analyst estimates compiled by Bloomberg.

Apple is dealing with a one-two combination of a resurgent Huawei and a slowing economy in China, which is cutting into its sales.

The company's stock is off some 10% year to date and 2% over the last 12 months. Shares of Big Tech rivals like Microsoft (MSFT) and Google (GOOG, GOOGL), meanwhile, are up 30% and 58% over the last year, respectively.

Mac revenue came in at $7.45 billion versus an anticipated $6.79 billion, while iPad revenue hit $5.55. Analysts were expecting $5.91 billion. Wearables, which includes AirPods, the Apple Watch, and Vision Pro, saw revenue of $7.91. Wall Street was looking for $8.28 billion.

But there was one bright spot for Apple in the quarter: Services revenue hit $23.87 billion. Analysts were expecting $23.28 billion.

Stocks close higher as 10-year yield hits a 3-week low

Thu, May 2, 2024 at 4:00 p.m. EDT, Josh Schafer

Stocks rallied on Thursday as investors digested Federal Reserve Chair Jerome Powell's comments that another interest rate hike is "unlikely."

These comments brought notable relief in the bond market, where rising yields had become a key concern among equity strategists. The 10-year Treasury yield (^TNX) has declined 12 basis points in the last two trading sessions. On Thursday, it closed at 4.57%, its lowest level in three weeks.

Meanwhile the 2-year Treasury has also seen significant relief, falling from just over 5% earlier this week to 4.88% on Thursday.

The unemployment rate is defying traditional economic indicators

Thu, May 2, 2024 at 3:34 p.m. EDT, Josh Schafer

The April jobs report is set for release at 8:30 a.m. ET on Friday. Consensus expects a slight slowdown in nonfarm payroll additions, while the unemployment rate is expected to remain flat at 3.8%.

This would mark the 27th straight month the unemployment rate has held under 4%, tying a streak last seen in 1970.

Given the Fed's aggressive interest rate hiking campaign that many believed would result in recession, the unemployment rate's resilience has largely defied most economic forecasting models.

In a research note on Thursday, Deutsche Bank's economics team led by chief US economist Matthew Luzzetti highlighted that labor churn has hit its lowest level since 2016, and is now at a level usually associated with a higher the unemployment rate.

Luzzetti's team used the ratio of total hires plus total separations as a share of the labor force as its churn indicator. And as seen in the chart below, up until the pandemic this had closely tracked with the unemployment rate.

"Based on the current depressed level of churn, we would expect an unemployment rate that was above 5%, not one that is still reasonably stable near historically low levels," Luzzetti wrote.

There are several reasons Luzzetti lists for why the correlation between the two data points has separated and the unemployment rate remains historically low. For one, corporate's difficulty finding workers could be holding down the hiring rate, and given the challenges, companies may be more reluctant to let workers go, therefore keeping churn low, Luzzetti suggested. Additionally, an increase in immigration has also played a key role in boosting labor supply while lingering impacts from the pandemic's massive job losses are still at play as some sectors are still hiring at high clip.

Given the Fed's commitment to holding rates high for longer than many hoped, these dynamics will be in focus beyond Friday's jobs report as investors and economists alike continue to track whether the US economy can hold on to achieve the vaunted "soft landing," where inflation retreats to the Fed's 2% goal without a significant downturn in the economy.

Markets show signs of 'relief' after Powell says no to rate hikes

Thu, May 2, 2024 at 2:49 p.m. EDT, Josh Schafer

On Wednesday, Federal Reserve Chair Jerome Powell turned down the notion that the Federal Reserve may once again be considering interest rate hikes given inflation's bumpy prints to start the year.

And markets appeared to celebrate that move on Thursday. The small-cap Russell 2000 index (^RUT), which is considered highly interest rate sensitive and has moved significantly when investor sentiment on the Fed's interest rate path shifts, was up more than 1.5% on Thursday.

Real Estate (XLRE), another interest rate-sensitive sector, led the 11 sectors in the S&P 500, rising about 1.5%.

Meanwhile, the S&P 500 (^GSPC) rose roughly 0.9%, while the Dow Jones Industrial Average (^DJI) gained 0.8%. The tech-heavy Nasdaq Composite (^IXIC) led the gains, up 1.5%.

JPMorgan Asset Management chief global strategist Gabriela Santos reasoned investors may be breathing a sigh of relief after Powell's comments.

"Ultimately, I think it was a relief just to hear that hikes really aren't on the table and they had actually been priced in before the meeting yesterday," Santos told Yahoo Finance.

Paramount shares jump on Sony, Apollo $26 billion buyout offer: Report

Thu, May 2, 2024 at 2:01 p.m. EDT, Alexandra Canal

Shares of Paramount Global (PARA) jumped on Thursday, up about 10%, after the New York Times reported Sony Pictures Entertainment and private equity firm Apollo Global Management have formally expressed interest in purchasing the media giant for $26 billion. (Disclosure: Yahoo Finance is owned by Apollo.)

Paramount reportedly declined Apollo's previous $26 billion all-cash offer, which included $14 billion worth of debt, for the entire company. It also reportedly declined a separate $11 billion bid for just the studio business from the firm.

The expression of interest was sent in a letter this week, according to the report. Under the terms of the all-cash offer, Sony would become the majority and controlling shareholder while Apollo would serve as a minority shareholder.

Paramount, which just ousted CEO Bob Bakish and established an “Office of the CEO” consortium in his place, is controlled through National Amusements (NAI), a holding company run by Shari Redstone, the daughter of the late Sumner Redstone.

National Amusements is currently in exclusive talks with David Ellison's Skydance Media to sell its controlling stake in Paramount, according to a source familiar with the matter. The company's exclusivity window with Skydance expires on Friday, although it's possible that timeframe could be extended.

Paramount's nonvoting shareholders have publicly expressed concerns over the terms of the deal, which critics say unfairly benefits Redstone given the purchase of her stake would reportedly result in a $2 billion cash windfall for the executive while investors with nonvoting shares would receive stock in the combined company (and a diluted shareholding).

Earlier this week, Skydance submitted a revised deal offer in an attempt to appease disgruntled investors, according to multiple reports. The new deal reportedly includes a $3 billion cash injection and offers current shareholders a larger stake of the combined company.

Paramount declined to comment on the Apollo/Sony report. Apollo and Sony did not immediately respond to Yahoo Finance's request.

Home prices flat to up across the US: Redfin

Thu, May 2, 2024 at 1:30 p.m. EDT, Dani Romero

For the first time in nearly two years, home prices aren't falling in any major metro area in the US amid a shortage in housing supply.

According to a report by Redfin, the median home-sale price rose from a year earlier or stayed flat in all 50 of the biggest US metro areas during the four weeks ending April 28, the first time that has happened since July 2022.

Redfin noted that low supply is driving prices higher. "New listings are up 15% year over year, but they’re still well below typical April levels: There were fewer new listings this April than any year on record except 2023 and 2020."

The median home sale price hit a record in April, reaching $383,188, Redfin found, a 4.8% increase year over year.

Regionally, Anaheim, Calif., home prices took the lead, rising 20% year over year, while West Palm Beach, Fla., gained 13.4%. Sale prices combined with current mortgage rates pushed the median mortgage payment to a record $2,890, up nearly 15% from a year ago.

Mortgage rates have climbed past the 7% threshold, with the rate on the 30-year fixed rate mortgage increasing to 7.22% Thursday, up from 7.17% the week prior, per Freddie Mac. Meanwhile, the Federal Reserve said Wednesday it is holding its benchmark rate steady, heightening the outlook that mortgage rates are likely to hold steady for the future.

Data from Redfin also showed that the median asking price for a home — what homeowners hope their property will sell for — jumped to a record $420,450 for the four weeks ended April 28. That's the biggest increase since September 2022.

The elevated costs have added challenges to homebuyers amid the spring home-buying season. Some agents are reporting that the recent uptick in mortgage rates is scaring buyers away and impacting mortgage application activity. But there still remain enough buyers allowing for prices to remain elevated.

Trending tickers Thursday

Thu, May 2, 2024 at 12:45 p.m. EDT, Ines Ferré

Carvana (CVNA)

Carvana stock occupied the No. 1 spot on Yahoo Finance’s trending tickers list Thursday. Shares of the used car platform rose 34% after posting record quarterly results.

The stock has been volatile over the last year, with short squeezes along the way. Short interest on the stock hovers just above 28% of the float.

"There is definitely a short squeeze going on in CVNA but it is the long buyers driving the stock price up with short covering greasing the skids for an easier ride up," said Ihor Dusaniwsky, president of S3 Partners.

Qualcomm (QCOM)

Qualcomm stock rose roughly 10% Thursday after the semiconductor company beat quarterly results expectations and issued an upbeat sales outlook.

Shares are up roughly 28% year to date.

Peloton (PTON)

Peloton shares fell 12% after the connected fitness equipment maker announced CEO Barry McCarthy would step down and the company's global workforce would be cut about 15%, impacting about 400 workers.

The maker of stationary fitness bikes also announced quarterly results, which missed on earnings estimates.

Homebuyers turn to ARMs as rates hover above 7% for third straight week

Thu, May 2, 2024 at 12:17 p.m. EDT, Ines Ferré

Homebuyers are turning to adjustable rate mortgages in order to strike a deal.

Yahoo Finance's Gabriela Cruz-Martinez reports:

The rate on the 30-year fixed mortgage increased to 7.22% from 7.17% the week prior, according to Freddie Mac. Rates have risen more than half a percent since the first week of the year and have hovered above 7% for three straight weeks.

It remains unclear when borrowing costs might start to ease, given the Federal Reserve’s decision this week to hold benchmark rates steady and keep them higher for longer. Though the Fed doesn’t directly impact mortgage rates, market reactions do.

Priced-squeezed homebuyers are doing anything they can to combat soaring borrowing costs, and that means adjustable-rate mortgages, or ARMs, are again gaining popularity.

The share of ARMs made up nearly 8% of total applications for the week ending April 26, the Mortgage Bankers Association (MBA) weekly survey found — the highest share seen this year.

The uptick in ARMs came even as overall applications for mortgages weakened last week after the average rate for the popular 30-year fixed home loan reached its highest level since November 2023.

Read more here.

Tech stocks rise, semiconductors lead gains

Thu, May 2, 2024 at 11:25 a.m. EDT, Ines Ferré

Semiconductor stocks were among the biggest gainers with the tech sector on Thursday. The Information Technology Sector Select ETF (XLK) rose more than 1% during trading.

Nvidia (NVDA) rose more than 2% while Qualcomm (QCOM) increased more than 10% following the semiconductor company's better-than-expected revenue forecast. Chipmaker equipment maker ASML (ASML) rose more than 2%.

Bitcoin rebounds to $59,000 following record ETFs outflow

Thu, May 2, 2024 at 10:34 a.m. EDT, Ines Ferré

Bitcoin (BTC-USD) rose more than 3% Thursday to hover above $59,000 following a record daily outflow from spot bitcoin exchange traded funds (ETFs).

The cryptocurrency sank to below $57,000 on Wednesday as investors retrieved a net $564 million from spot bitcoin ETFs, according to Bloomberg data.

The cryptocurrency has been on a recent downtrend, falling for three consecutive days prior to Thursday's rebound.

Carvana soars 34% on surprise profit

Thu, May 2, 2024 at 10:07 a.m. EDT, Ines Ferré

Carvana (CRVN) shares soared 34% on Thursday after the online car platform posted a surprise profit for its latest quarter.

The company reported quarterly adjusted earnings of $0.23 versus expectations for a loss of $0.80. Revenue came in at $3.06 billion, above the Wall Street estimates for $2.76 billion.

The company also posted a record for gross profit per unit (“GPU”) of $6,432, or $2,129 higher than last year.

Shares were hovering near $120 each in early trading Thursday. The stock is up roughly 143% year to date.

Stocks rise after Fed holds rates steady, Apple earnings on deck

Thu, May 2, 2024 at 9:38 a.m. EDT, Ines Ferré

Stocks rose on Thursday morning after a volatile trading session on Wednesday following the Federal Reserve's policy decision.

The S&P 500 (^GSPC) rose roughly 0.6% at the open. The Dow Jones Industrial Average (^DJI) gained 0.5%. The tech-heavy Nasdaq Composite (^IXIC) led the gains, up 0.8%.

On Wednesday the Federal Reserve held rates unchanged. The fear of a possible rate increase instead of cuts had creeped into the markets recently. Investors were reassured by Fed Chair Jerome Powell's commentary that the central bank was unlikely to hike rates.

On the earnings front, Apple (AAPL) is set to report this afternoon. Shares of the iPhone maker opened roughly 1.5% higher on Thursday.

Bring your macro notes to Apple's earnings call tonight

Thu, May 2, 2024 at 5:51 a.m. EDT, Brian Sozzi

Most investors are bracing for a soft quarter from Apple (AAPL) this afternoon.

To that end, shares are down 12% year to date versus a 5% gain for the S&P 500.

Lots of focus on how economic challenges in the US and China are impacting mighty Apple. If these challenges prove more of an issue to sales, investors could refrain from getting too ecstatic on the inevitable AI talk on the earnings call.

Helpful point from JPMorgan analyst Samik Chatterjee:

"The sentiment [on Apple] has improved despite tough datapoints as the focus has shifted to owning the potential AI upgrade cycle; however, the upcoming earnings print will still matter for investors in offering insights into the magnitude of the cyclical challenges on account of pressured consumer spending as well as the headwinds in relation to market share moderation in China."

The pushback on rate hikes from the Fed

Thu, May 2, 2024 at 5:45 a.m. EDT, Brian Sozzi

The Street is singing in unison this morning on a growing narrative in markets: The Fed may actually hike rates this year to finally bring inflation down to its 2% goal.

That song is that pigs have a better chance of flying than the Fed whipping out a rate increase.

Good point on all of this from Mike O'Rourke at JonesTrading this morning after Wednesday's Fed decision:

"Fear hype that chairman Powell would put rate hikes back on the table was ludicrous. If there was ever a straw man catalyst for a rally, this was it. The speculation was as inane as the belief at the start of the year that the FOMC would cut interest rates six times this year. There was nothing in the data or the Fed commentary supporting such easing speculation, but somehow it became the consensus view and was actually priced into markets. Chairman Powell has been adamantly clear on repeated occasions that if inflation is resilient, the FOMC will hold rates steady for as long as necessary to rein in inflation. Beyond risking overtightening as some decelerating economic data emerges, there is also an election in six months. Most obviously, this is a man who took the Fed's balance sheet from $4 trillion four years ago to $9 trillion, then today said he is tapering normalization at $7.4 trillion. Chairman Powell is only hawkish when he has no other choice, and currently inflation is keeping him in check. Raising interest rates aggressively a year late does not make one tough on inflation."