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May 4, 2018

CNBC Breaking News: Dow rallies more than 250 points as Apple leads tech higher May 4, 2018.

cnbc.com

Dow rallies more than 250 points as Apple leads tech higher

Thomas Franck, Alexandra Gibbs

U.S. stocks rose sharply Friday as Wall Street shrugged off lackluster numbers in the government's monthly jobs report while shares of Apple hit an all-time high to lead the technology sector higher.
The Dow Jones industrial average rose 265 points thanks to a 3.5 percent rally in Apple shares, which jumped after famed investor Warren Buffett revealed that he purchased 75 million shares during the first quarter. The Dow dropped more than 100 points shortly after the opening bell.
The S&P 500 rose 1 percent after falling 0.4 percent, buoyed by a 1.6 percent gain in technology stocks. The Nasdaq composite rose 1.4 percent thanks to the aforementioned rally in Apple, a 1.4 percent gain in Facebook and a 1.3 percent boost in Google-parent Alphabet.
The Labor Department reported that the economy added 164,000 jobs in the month of April, lower than the 195,000 expected by economists polled by Reuters. Average hourly earnings growth also missed, rising only 0.15 percent against expectations of a 0.2 percent gain.
Despite the miss in the number of jobs added, the government said the unemployment rate fell to 3.9 percent, an 18-year low.
"I was surprised we had a bit of a sell-off there," said JJ Kinahan, chief market strategist at TD Ameritrade. "You're a little bit light on the top line, and a little bit disappointing on the wage growth, but there was very little job loss and a revision higher from what was considered a very disappointing read last month."
Michael Nagle | Bloomberg | Getty Images
Changes in the average hourly earnings numbers are closely watched by members of the Federal Reserve as a bellwether for inflation. Hourly earnings have been increasing at about a 2.7 percent pace, which is above the recovery pace but still short of where Federal Reserve officials are targeting.
Still, the average hourly earnings miss wasn't large enough to derail fears of more aggressive tightening from the Fed, TD Ameritrade's Kinahan added.
Those who fear rising rates "can find something in here to say it's good enough to keep down the path to four hikes this year," he said. "The other thing is, after we had that big down move yesterday and then came back, there's a bit of a natural pressure early in the day."
Leading the strong numbers Friday, Apple jumped sharply after longtime investor Warren Buffett revealed that he bought 75 million shares during the first quarter, which added to the conglomerate's already massive stake in the tech giant.
Buffett estimated that Berkshire Hathaway's cash position dipped to "a little over" $100 billion because of lots of stock buying in the first three months of the year.
In its earnings report this week, iPhone sales were still up from a year ago, and Apple CEO Tim Cook said in a statement that customers "chose iPhone X more than any other iPhone each week in the March quarter."
Also carrying tech higher was a 3.6 percent bump in Activision Blizzard, which reported adjusted earnings and revenue that beat Wall Street expectations Thursday. The company reported its official numbers after Dow Jones reported a few incorrect headlines about its financial report earlier on Thursday.
"Tech is having a good day and obviously Apple is helping. The Warren Buffett headlines have helped give momentum to share prices," said Quincy Krosby, chief market strategist at Prudential Financial.
"But I also think the unemployment report was helpful for the bears and was also helpful for the bulls: It underscores the tug-of-war in the market," Krosby added. "You had a pullback in the wages, but then again, if you look below the headline number, it shows strength. It helps assuage fears that inflation in galloping higher."
Overall, Krosby said, market volatility has fallen back into a more comfortable range and valuations have become a little more attractive, though perhaps not enough to drive a significant uptick in trading volume.
Still, markets have been keeping an eye on interest rates and signs of burgeoning inflation.
Though the yield on the benchmark 10-year Treasury note has fallen off recent highs above 3 percent, the Fed announced Wednesday that it continues to see prices creeping upward and that its policy of gradual tightening is appropriate.
The average hourly earnings figure can reveal rising input prices at businesses throughout the economy, a phenomenon usually followed by rising consumer prices.
Several central bank officials are set to deliver remarks Friday.
San Francisco Fed President John Williams will be in Stanford, California, for a lunch keynote at the Hoover Institution's Currencies, Capital, and Central Bank Balances: A Policy Conference. Other Fed officials are due to deliver remarks at the same event, including Dallas Fed President Robert Kaplan.
The early moves in U.S. stocks came as markets across the globe showed a mixed picture. On Thursday, U.S. stocks finished relatively mixed, after the Dow Jones industrial average erased a nearly 400-point loss during the session, on the back of strong earnings.
On Friday, markets in the Asia-Pacific region closed mostly lower, while in Europe, stocks edged higher during the session.
Members of the United States' delegation will continued trade negotiations in China.
Treasury Secretary Steve Mnuchin said Friday that the U.S. trade delegation had had positive talks with China so far, Reuters reported. A breakthrough deal between the nations on altering China's economic policies, however, is unlikely.
The United States is prepared to impose further tariffs on Chineseproducts if Beijing walks away from its commitments, according to a reporter at the Wall Street Journal.
In a tweet posted Friday, Lingling Wei, a China economics correspondent at the Wall Street Journal, said the U.S asked China to reduce its trade surplus by at least $200 billion by year-end 2020.
—CNBC's Patti Domm contributed to this report.