ASX is about to explode while Apple drives a rally

PacWest Bancorp was up 81.7 percent, though it still lost 43.3 percent this week. Western Alliance Bancorp rose 49.2 percent to trim its loss for the week to 26.8 percent.

The concern is that falling stock prices for banks could create a vicious cycle that causes customers to lose confidence and withdraw their deposits, which in turn creates more fear for the system.

Apple didn’t rise as much as those banks on Friday, but its moves are more powerful. Apple is the most valuable stock on Wall Street, so its movements weigh excessively on the S&P 500 and other indices.

With a gain of 4.7 percent, it was the biggest driver in the S&P 500. The iPhone maker reported revenue and revenue declines, but results nonetheless beat analysts’ moderate expectations.

The story was similar in the broader market for results during the first three months of the year. Analysts started this earnings reporting season with low expectations given high interest rates and a slowing economy, but most companies have outperformed fears.

Live Nation Entertainment rose 15 percent after reporting a more modest loss than analysts had expected, while Cigna Group rose 7 percent after beating earnings and revenue forecasts.

On the losing side was Lyft, which fell 19.3 percent after issuing a weaker current quarter financial forecast than Wall Street had expected. It is in contrast to competitor Uber, which rose sharply in the week after the earnings report.

Apple’s shares rose more than 4 percent.Credit: Bloomberg

In the bond market, yields rose immediately after the jobs report, as traders bet it would prompt the Fed to keep rates high for longer than previously expected.

The Fed said on Wednesday it was unsure of its next move after raising its benchmark rate to a range of 5 percent to 5.25 percent, up from virtually zero at the beginning of last year. It has raised interest rates at its fastest pace in decades to curb inflation, but that works by slowing the economy and hurting investment prices.

Many traders expect the Fed to hold rates steady at its next meeting in June, which would be the first time in more than a year that this has happened. After that, expectations diverge.

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The Fed has insisted on seeing inflation come down slowly, which would mean interest rates would stay high for a while, if not rise further if inflation accelerated again. Meanwhile, many traders see the economy weakening enough that the Fed will have to cut rates later this year.

The turmoil in the US banking sector is adding to the uncertainty. If it causes banks to withdraw their loans, it could act as rate hikes that further choke the economy.

Friday’s jobs report offered encouraging and discouraging news depending on one’s outlook.

The strong hiring figures again confirm that the labor market remains resilient. It supports the rest of the economy, which is already starting to slow under the weight of much higher interest rates.

But more worrying for pessimists was the 4.4 percent increase in employee wages from a year earlier. The fear is that excessive wage increases could prompt companies to raise prices for their own goods and take other steps that create a vicious circle that keeps inflation high. That, in turn, could put pressure on the Fed to keep rates high longer, which could cause more things to break than First Republic.

The yield on the 10-year Treasury rose from 3.38 percent at the end of Thursday to 3.43 percent. It helps set rates for mortgages and other important loans.

All told, the S&P 500 rose 75.03 points to 4,136.25. The Dow Jones gained 546.64 to 33,674.38 and the Nasdaq climbed 269.01 to 12,235.41.

AP

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