Dow ends up more than 500 points, U.S. stocks snap 4-day losing streak after jobs report, Apple earnings

By Christine Idzelis and Joseph Adinolfi

S&P 500 books weekly loss despite Friday's big bounce

U.S. stocks closed sharply higher Friday, with all three major benchmarks snapping four straight days of losses, after strong jobs data for April, Apple Inc.'s better-than-forecast earnings report and a rebound in shares of regional banks.

How stocks traded

For the week, the Dow fell 1.2%, the S&P 500 declined 0.8% and the Nasdaq edged up 0.1%, according to Dow Jones Market Data.

What drove markets

U.S. stocks climbed sharply Friday, as investors digested a stronger-than-expected jobs report for April and a jump in Apple Inc. shares led the Dow Jones Industrial Average's gainers and lifted the S&P 500 and Nasdaq Composite.

In a market gripped by concerns over regional banks, Apple (AAPL)earnings offered a welcome distraction following banking-sector volatility this week that began with failed First Republic Bank's takeover by JPMorgan Chase & Co. (JPM)

Apple announced a 4% dividend hike and a $90 billion extension of its stock buyback program in addition to reporting its quarterly results. The consumer-technology giant is among Big Tech companies driving the S&P 500's gains so far this year, with its shares up 4.7% on Friday.

In U.S. economic data, the April employment report showed the U.S. economy added 253,000 jobs last month, surpassing the 180,000 forecast by economists polled by The Wall Street Journal. Annual wage growth also accelerated to 4.4%, up from 4.2% during the prior month, while the unemployment rate dropped to 3.4%, from 3.5%.

"If you're a bull, you can look at the jobs data and say the economy is pretty strong," which should support consumer spending, said Ann Miletti, head of active equity at Allspring Global Investments, by phone Friday. "I'm a little bit more in that cautious camp," as areas of the economy such as manufacturing have shown signs of slowing, she said.

Read: Jobs report shows strong 253,000 increase in April. Labor market not cooling much

Following a difficult week for stocks, investors were ready for some relief heading into the weekend, according to JJ Kinahan, chief executive of IG North America.

"After a four-day losing streak, I'm not surprised to see a bit of upward pressure especially after Apple's earnings last night," Kinahan by phone. "It has been a bit of a wild week in general, and I think most people are looking for a relief day today."

For the week though, the Dow Jones Industrial Average fell 1.2%, while the S&P 500 slipped 0.8% and the tech-heavy Nasdaq Composite eked out a 0.1% gain, according to Dow Jones Market Data.

After a flurry of downbeat economic data and concerning headlines about the banking system, the upbeat jobs report might benefit stocks by signaling that the U.S. may be headed for a soft landing instead of a punishing recession.

"As the figures have come in higher than expected, as the ADP numbers did, markets may respond positively on the hopes of a mild recession or a soft landing, rather than a serious economic crash," said Jason Mountford, stock market analyst at Q.ai, an investment platform.

Meanwhile, investor attention remains on regional banks. Shares of PacWest Bancorp (PACW)surged 81.7% Friday while Western Alliance Bancorp (WAL) soared 49.2%, after each booking heavy losses on Thursday. The SPDR S&P Regional Banking ETF (KRE) gained 6.3% Friday.

Read:Zions, Western Alliance stocks soar after J.P. Morgan says buy, because they are 'substantially mispriced'

"It's too soon to say that that's over with," Allspring's Miletti said of the recent regional-banking trouble. "I think we will probably see a recession," maybe in the fourth quarter or early part next year, she said.

St. Louis Federal Reserve President James Bullard on Friday downplayed the risk of a recession in the U.S. during a talk to the Economic Club of Minnesota. In his base case for the economy, Bullard said he expects to see continued slow growth, a somewhat softer labor market and falling inflation.

"That would be the soft-landing scenario," he said.

See:Talk of recession in U.S. is greatly exaggerated, Fed's Bullard says

Companies in focus

--Steve Goldstein contributed to this report.

-Christine Idzelis

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

05-05-23 1654ET

Copyright (c) 2023 Dow Jones & Company, Inc.