Stocks rose Friday as investors weighed a cooling in jobs growth that could reinforce hopes that the Federal Reserve is done with its rate-hiking campaign.
The Dow Jones Industrial Average (^DJI) gained about 0.7%, or more than 200 points, while the S&P 500 (^GSPC) added nearly 1%. The tech-heavy Nasdaq Composite (^IXIC) gained roughly 1.4%. It was the best weekly performance for all indexes in 2023.
The US economy added 150,000 jobs in October, undershooting the 180,000 reading expected, with auto industry strikes a factor, the Bureau of Labor Statistics said. The unemployment rate ticked higher to 3.9%.
The health of the labor market is a key input for Fed policymakers, and the signs of a slowing economy should support the case for the central bank to hold off from another rate hike this year.
Tech stocks recouped earlier losses after disappointing results from Apple (AAPL). While Apple's earnings beat estimates in its quarterly report after the bell, the iPhone maker was cautious in its outlook for growth, saying it expects sales of iPads and wearables to "decelerate significantly."
Investors are weighing what that could mean about the resilience of consumer, and whether the series of disappointing earnings this season might feed into the Fed's assessment of how its tightening is dampening the economy.
Stocks close higher as the market anticipates an end to Fed hikes
The latest jobs report showing a labor market slowdown is a welcome sign for many investors who believe that worsening unemployment figures will prompt the Federal Reserve to end its tightening campaign.
A look at the week ahead
Uber (UBER) and Lyft (LYFT) are among the major names reporting earnings next week, just days after the two ride-sharing companies agreed to pay New York drivers a $328 million settlement in the latest legal battle over gig work. Instacart (CART) is also scheduled to report after going public in September, offering another window into the gig economy. Disney (DIS), Robinhood (HOOD) and eBay (EBAY) are also slated to post earnings.
Investors will get a fresh look at the latest reading on consumer credit, as interest rates remain elevated and Americans head into the holiday shopping season. A fresh survey on consumer sentiment will also offer a reading into the mood of consumers as unemployment figures deteriorate slightly.
Yahoo Finance's Brent Sanchez has a graphical breakdown of what to watch next week:
Whats next for Sam Bankman-Fried
After a Manhattan federal jury found FTX co-founder Sam Bankman-Fried guilty of defrauding his customers, investors, and lenders, the 31-year old entrepreneur still faces even more potential legal jeopardy in the year ahead.
Bankman-Fried, who presided over the largest crypto collapse in history, is scheduled to face separate criminal charges that allege he committed bank fraud and bribed Chinese officials in another trial due to begin in March.
And the sentencing for the guilty charges he was just convicted of is scheduled for the end of that same month. The counts against him carry a maximum sentence of 110 years.
"We respect the jury’s decision. But we are very disappointed with the result," Bankman-Fried's defense lawyer, Mark Cohen, said. "Mr. Bankman-Fried maintains his innocence and will continue to vigorously fight the charges against him."
As Yahoo Finance's Alexis Keenan reports, Jury members deliberated for roughly four hours after Bankman-Fried's criminal trial wrapped up Thursday. They concluded he was guilty on all seven criminal charges, ranging from wire fraud to money laundering.
Investors recoil after Apple delivers cautious outlook
After the bell on Thursday Apple touted iPhone sales that increased to $43.8 billion in its fourth quarter, slightly beating expectations and marking a new record for iPhone sales in its September period. Services revenue, an increasingly important part of the iconic hardware company, surpassed $22 billion for the first time.
But investors focused instead on the downsides, sending the stock down 1% Friday afternoon. During a call with analysts Thursday evening, Apple CFO Luca Maestri said the company is expecting revenue for the iPad and Wearables categories to "decelerate significantly" from the fourth quarter. Total company revenue is also expected to be similar to the last year, he said.
Some analysts focused on Apple's year-over-year sales decline in China.
"We believe the biggest negative from the results was the 2% Y/Y decline in China, worse than we expected," said Angelo Zino, senior equity analyst at CFRA Research, in a note after the earnings. Although, Zino kept a Buy rating for the company and has a $220 12-month price target on the shares, representing a roughly 25% increase on the current price.
While David Vogt of UBS said in a note on Friday that China still poses a risk for the iPhone in the fiscal year of 2024 as "we expect Huawei to ramp production of high-end smartphones over the next 12 months."
Stocks trending in afternoon trading
Here are some of the stocks leading Yahoo Finance’s trending tickers page in afternoon trading on Friday:
NIO (NIO): The Chinese electric vehicle maker rose 5% Friday afternoon after the company said it plants to cut its workforce by 10% in an effort to boost efficiency and reduce costs as it faces growing competition.
Apple (AAPL): Shares of the iPhone maker fell by 1% after quarterly earnings beat estimates but executives forecasted a cautious outlook for growth, saying it expects sales of iPads and wearables to "decelerate significantly."
Coinbase (COIN): The country’s largest crypto exchange posted its seventh consecutive quarterly loss as its trading volumes and the number of people trading on its platform fell, sending shares down a volatile path Friday. During afternoon trading the stock was up 1% as investors embraces a $2 million loss in the third quarter that beat Wall Street expectations.
DraftKings (DKNG): Shares rose by more than 15% during after the sports betting company posted better-than-expected third quarter results. Revenue of $790 million beat estimates of about $703 million. The company also raised its full-year revenue guidance.
Stocks rise in afternoon trading
Wall Street kept up the positive momentum during afternoon trading on Friday as fresh data bolstered the case for an end to the Fed's tightening campaign.
Stocks rise and 10-Year Treasury yields retreat
Stocks jumped and the yield on 10-year government bonds fell on Friday as investors digested new jobs data that showed slowing growth, an indicator that is closely watched by officials at the Federal Reserve, and one that suggest a pause on additional rate hikes.
Fed Chair Powell acknowledged in a press conference on Wednesday that some slowing in the labor market will likely be required for inflation to continue its downward trajectory. Nonfarm payroll growth totaled 150,000 in October, data from the Bureau of Labor Statistics showed, while the unemployment rate rose to 3.9% from 3.8%. The unemployment rate now stands at its highest level since January 2022.
The S&P 500 rose nearly 1% Friday, heading into the afternoon trading session, alongside gains for the other major indexes. Yields on the 10-Year fell to 4.539%, down 12 basis points and off its recent peak of 5%, in another sign that the market anticipates the Fed is done with raising rates.
On Friday markets were pricing in a 95% chance the Fed doesn't raise rates at its next meeting, according to the CME FedWatch Tool, up about 15% from a day prior.
Strikes have cost US economy more than 75K jobs this year
The US economy added a modest 150,000 jobs in October following an especially strong September report — but the ongoing auto workers and actors strikes both registered a hit to the jobs report last month as strike activity continues to weigh on growth.
According to data released by the Bureau of Labor Statistics Friday morning, employment in manufacturing decreased by 35,000 in October, reflecting a decline of 33,000 jobs in motor vehicles and parts "that was largely due to strike activity." This was the first time the auto strike's impact showed up in the monthly jobs report.
UAW’s GM national committee will vote Friday on whether to send the tentative deal to its membership. The deal, once confirmed, effectively ends the bruising labor dispute that has brought the autos industry to a complete halt.
Coupled with jobs lost in the autos sector, employment in motion picture and sound recording industries decreased by another 5,000 as Hollywood actors remain firmly on the picket lines following the official conclusion of the nearly 150-day writers strike last month.
Employment in those industries fell by 7,000 in September and 17,000 in August, "reflecting the impact of labor disputes." Since May, which is when the writers strike first began, employment in those industries has declined by 44,000.
The actors union, SAG-AFTRA, will meet with studios again on Friday as the two sides remain locked into heated negotiations.
Stocks trending in morning trading
Here are some of the stocks leading Yahoo Finance’s trending tickers page in morning trading on Friday:
Apple (AAPL): Shares of the iPhone maker fell by 2% Friday morning after quarterly earnings beat estimates but executives forecasted a cautious outlook for growth, saying it expects sales of iPads and wearables to "decelerate significantly."
Block (SQ): The fintech company topped Wall Street estimates for both revenue and profits, sending the stock up by 14% Friday. Block also raised its full-year adjusted EBITDA forecast for 2023 and issued upbeat guidance for 2024.
DraftKings (DKNG): Shares rose by more than 7% during morning trading after the sports betting company posted better-than-expected third quarter results. Revenue of $790 million beat estimates of about $703 million. The company also raised its full-year revenue guidance.
Expedia (EXPE): The travel booking company surged 16% as investors celebrated a major earnings beat and record revenue that the company reported on Thursday after the bell.
Carvana stock pops on surprise profit
Carvana (CNVA) shares shot up more than 4% on Friday after the online used car platform reported a surprise profit last quarter, even as the number of units sold declined year-over-year.
Yahoo Finance's Ines Ferré reports:
The Tempe- Arizona based company posted adjusted earnings of $3.60 per share, versus estimates for a loss of 78 cents. Revenue of $2.77 billion came in line with expectations. The pre-owned car retailer's total gross profit per unit, or GPU jumped 70% year-over-year to $5,952.
Analysts at DA Davison maintained a neutral rating on the stock and lowered their price target to $35 from $60, citing lower unit sales compared to last year. The number of units sold in the quarter totaled 80,987, about 6% higher than the prior quarter, but down 21% year-over-year.
The company expects a decline in retail units sold driven primarily by industry and seasonal patterns. Carvana has been aggressively focused on achieving profitability at the near term expense of growth.
The company, once a pandemic darling, laid off workers last year in an effort to cut costs and preserve cash. Shares reached a low of $3.55 in December 2022 amid speculation of bankruptcy.
The stock is a short seller favorite. In the first half of the year it soared 1000% to more than $50 per share, leaving short sellers with a $2 billion loss.