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Concerns about Fed interest rate hikes fade, Apple also performs well, and stock prices rise

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U.S. stocks rose on Thursday in the calm after the Fed Day storm, as investors put interest rate concerns aside and focused on Apple’s (AAPL) earnings and the upcoming monthly jobs report.

The S&P 500 (^GSPC) rose about 0.5% and the Dow Jones Industrial Average (^DJI) rose 0.5%. The Nasdaq Composite Index (^IXIC), which has a high proportion of high-tech stocks, led the rise, rising 0.9%.

Stocks are recovering from Wednesday’s volatile trading dominated by the pending Federal Reserve policy decision. Chairman Jerome Powell downplayed the possibility of a rate hike, reassuring investors who had worried that recent signs of “sticky” inflation would prompt a move to hike rates.

read more: Impact of Fed interest rate decisions on bank accounts, CDs, loans, and credit cards

All eyes will be on Friday’s April jobs report, as Powell reiterates that the Fed still relies on data to shape its thinking. Wall Street is watching for signs of cracks in the strong labor market story, a key factor for policymakers.

Meanwhile, the OECD credited the world economy’s outperformance as a reason why the world economy is growing faster than expected, giving another reason for optimism.

The main focus on earnings is Apple’s quarterly results, which are expected after the market closes on Thursday. Wall Street is bracing for a drop in revenue and the possibility of a sharp decline in iPhone sales in China. However, there may be a bright spot in the performance of the “Magnificent Seven” mega-cap stocks.

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  • Homebuyers turn to ARMs as interest rates remain above 7% for third consecutive week

    Homebuyers are turning to adjustable-rate mortgages to get the deal.

    Gabriela Cruz-Martinez of Yahoo Finance reports:

    According to Freddie Mac, the 30-year fixed mortgage rate rose to 7.22% from 7.17% last week. Interest rates have increased by more than 0.5% since the first week of this year and have remained above 7% for three consecutive weeks.

    It remains unclear when borrowing costs will start to ease, given the Federal Reserve’s decision this week to keep its benchmark interest rate unchanged and keep it high for an extended period of time. Although the Fed does not directly affect mortgage rates, the market’s reaction does.

    Price-squeezed homebuyers are doing everything they can to combat rising borrowing costs, which means adjustable-rate mortgages (ARMs) are becoming popular again.

    The ARM share accounted for nearly 8% of total applications for the week ending April 26, the highest share this year, according to the Mortgage Bankers Association’s (MBA) weekly survey.

    The rise in ARMs came even as overall mortgage applications slumped after average interest rates on popular 30-year fixed mortgages hit their highest level since November 2023 last week.

    Please see here for the detail.

  • Tech stocks rise, semiconductors lead the rally

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

    AI darling Nvidia (NVDA) rose more than 2%, and Qualcomm (QCOM) rose more than 10% after the semiconductor company’s better-than-expected earnings forecast. Semiconductor manufacturing equipment maker ASML (ASML) rose more than 2%.

  • Bitcoin rebounds to $59,000 after record ETF outflows

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

    The cryptocurrency fell below $57,000 on Wednesday as investors took a net $564 million out of the Spot Bitcoin ETF, according to Bloomberg data.

    The cryptocurrency has been trending lower recently, having fallen for three straight days before Thursday’s rebound.

  • Carvana soars 34% on unexpected profit

    Carvana (CRVN) stock soared 34% on Thursday after the online auto platform posted a surprise profit in its latest quarter.

    The company reported quarterly adjusted earnings of $0.23, compared to expected losses of $0.80. Revenue was $3.06 billion, beating Wall Street expectations of $2.76 billion.

    The company also achieved a record gross profit per unit (“GPU”) of $6,432, an increase of $2,129 over last year.

    In early trading Thursday, shares were hovering around $120 each. The stock is up about 143% since the beginning of the year.

  • Fed keeps interest rates unchanged, Apple’s profits are strong and stock prices rise

    Stocks rose on Thursday morning after volatile trading on Wednesday following the Federal Reserve’s policy decisions.

    The S&P 500 (^GSPC) gained about 0.6%. The Dow Jones Industrial Average (^DJI) rose 0.5%. The Nasdaq Composite Index (^IXIC), which has a high proportion of tech stocks, led the rise, rising 0.8%.

    On Wednesday, the Federal Reserve kept interest rates unchanged. Concerns about the possibility of rate hikes rather than rate cuts have crept into the market recently. Investors took comfort in comments from Chairman Jerome Powell that the Fed is unlikely to raise interest rates.

    On the earnings side, Apple (AAPL) is scheduled to report this afternoon. The iPhone maker’s stock opened about 1.5% higher on Thursday.

  • Bring your macro memo to Apple’s earnings call tonight

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

    So stocks are down 12% since the beginning of the year, while the S&P 500 is up 5%.

    Much attention has been focused on how economic challenges in the United States and China are affecting the mighty Apple. If these challenges become a bigger issue for sales, investors may refrain from getting too excited about the inevitable AI talk on earnings calls.

    Useful points from JP Morgan analyst Samik Chatterjee:

    “As focus shifts to sustaining potential AI upgrade cycles, (app sentiment improving despite tough data points, insight into the magnitude of cyclical challenges due to consumer pressure) Future earnings results remain important to investors as well as headwinds related to suppressed market share in China. astheheadwindsinrelationtomarketsharemoderationinChina” [onApplhasimproveddespitetoughdatapointsasthefocushasshiftedtoowningthepotentialAIupgradecycle;howevertheupcomingearningsprintwillstillmatterforinvestorsinofferinginsightsintothemagnitudeofthecyclicalchallengesonaccountofpressuredconsumerspendingaswellastheheadwindsinrelationtomarketsharemoderationinChina”

  • Rebellion against Fed rate hikes

    This morning, the Street papers are singing in unison about the growing discourse in the market. The idea is that the Fed could actually raise interest rates this year, eventually lowering inflation to its eventual 2% target.

    The song is that pigs are more likely to fly than the Fed raising interest rates.

    Mike O’Rourke of Jones Trading made good points about all of this this morning in the wake of Wednesday’s Fed decision.

    “The fear hype that Chairman Powell would put rate hikes back on the table was laughable. If ever there was a straw man catalyst for the rally, this was it.” There was nothing in the data or Fed commentary to support such easing expectations, but somehow it became a consensus that if inflation were to occur, it would actually be priced into the market. I have categorically stated this many times. The economy is resilient and the FOMC will likely keep interest rates on hold for as long as necessary to contain inflation, but not only does it risk overtightening when it becomes clear that economic data is slowing, but also with an election six months away. ing. Today he said he would phase out normalization at $7.4 trillion, up from $4 trillion four years ago to $9 trillion. Chairman Powell becomes hawkish only when he has no other choice, and inflation is currently holding him back. Aggressively raising interest rates with a one-year delay will not make the economy tougher against inflation.. ”



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