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Regional banks rebound after bruising selloff
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U.S. employers add 253,000 jobs in April
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Lyft slumps as lower fares stoke margin concerns
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Indexes up: Dow 1.20%, S&P 1.42%, Nasdaq 1.74%
(Updates prices throughout; adds analyst comment in paragraph
11, Fed data on bank lending in paragraph 12)
By Ankika Biswas and Sruthi Shankar
May 5 (Reuters) - U.S. stocks gained on Friday lifted by
strong results from Apple and rebounding shares of regional
banks, while a stronger-than-expected jobs report eased worries
of an imminent economic downturn.
Apple Inc gained 4.7% on better-than-expected
results, helped by strong iPhone sales and notable inroads in
India and other newer markets, fuelling a 2.3% advance in
technology stocks .
PacWest Bancorp rallied 83.3% and Western Alliance
Bancorp jumped 39.7% at the end of a bruising week for
regional lenders amid the collapse of First Republic Bank.
Meanwhile, investors appeared to take in stride data showing
U.S. job growth accelerated in April while wage gains increased
solidly, pointing to sustained labor market strength that could
compel the Federal Reserve to keep interest rates higher for
longer.
"This is a strong report and shows that the labor market is
resilient. It bails out the Fed for raising another quarter
point," said Peter Cardillo, chief market economist at Spartan
Capital Securities.
"It's been a tough week for the stock market, the regional
banking problems have raised the fear factor, but Apple earnings
came in strong. Stocks are coming up from near-term oversold
condition."
Traders are betting the Fed will start easing the policy
rate by September, according to CME Group's FedWatch Tool,
compared with July before the release of the jobs data.
The U.S. central bank raised its interest rate by 25 basis
points as expected on Wednesday, but Chair Jerome Powell noted
it was too early to say with certainty that the rate-hike cycle
was over as inflation remains the chief concern.
The main indexes are set for weekly losses after PacWest's
move on Thursday to explore strategic options deepened concerns
about the health of regional banks.
The KBW regional index gained 4.4% after sharp losses
earlier this week, while the S&P 500 Banks index was up
3.1%.
"The Fed data about its emergency lending dropping
significantly ... I think the market is feeling better about the
banks and their situation," said Michael O'Rourke, chief market
strategist at JonesTrading.
U.S. central bank data showed lending to banks shrunk a bit
in the latest week, as money shifted out of a key lending tool.
Following upbeat results from megacap companies, analysts
expect profits for S&P 500 companies in the first quarter to
decline 0.7% from a year earlier, according to Refinitiv data,
compared with a 5.1% drop expected at the start of April.
At 12:36 p.m. ET, the Dow Jones Industrial Average was up 397.24 points, or 1.20%, at 33,524.98, the S&P 500 was up 57.76 points, or 1.42%, at 4,118.98, and the Nasdaq
Composite was up 207.75 points, or 1.74%, at 12,174.15.
Used-car retailer Carvana Co jumped 29.6% as it
expects to post a profit in the current quarter and plans to
further bring down excess used-car inventory.
Lyft Inc slumped 21.1% as the ride-hailing
company's strategy to claw back market share from rival Uber
Technologies Inc with lower fares stoked concerns about
a hit to its profit margins.
Advancing issues outnumbered decliners for a 4.82-to-1 ratio
on the NYSE and a 2.57-to-1 ratio on the Nasdaq.
The S&P index recorded 10 new 52-week highs and three new
lows, while the Nasdaq recorded 64 new highs and 83 new lows.
(Reporting by Ankika Biswas and Sruthi Shankar in Bengaluru;
Additional reporting by Stephen Culp in New York; Editing by
Subhranshu Sahu and Shounak Dasgupta)
