Wall Street rallies, ASX set to rise

Stubbornly high readings on inflation this year pushed Federal Reserve Chair Jerome Powell to say on Wednesday that it will likely take “longer than previously expected” to get enough confidence about inflation cooling enough to warrant cutting interest rates.

“Some of this data coming out of the employment report dampens that narrative a little bit,” said Charlie Ripley, senior investment strategist for Allianz Investment Management. “They want to cut interest rates, but they need more confidence in the inflation data and today’s wage data is a little bit more confidence for them.”

The Fed’s main interest rate has been sitting at its highest level since 2001, and cuts would release some pressure on the economy and financial markets.

The benchmark S&P 500 fell 4.2 per cent in April, its first monthly loss since October, as signals of stubbornly high inflation forced traders to ratchet back expectations for when the Fed could begin easing interest rates.

After coming into the year forecasting six or more cuts to rates in 2024, traders are now largely betting on just one or two, if any, according to data from CME Group.

Friday’s market rally was widespread, though technology stocks powered much of the gains. Apple jumped 6 per cent after announcing a mammoth $US110 billion ($166 billion) stock buyback. The tech giant reported late Thursday its steepest quarterly decline in iPhone sales since the outset of the pandemic.

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Microsoft rose 2.2 per cent and Nvidia added 3.5 per cent.

Several companies notched gains after reporting strong quarterly results.

Amgen climbed 11.8 per cent after the biotechnology company gave investors an encouraging update on a potential obesity drug. Live Nation Entertainment added 7.2 per cent after the ticket seller and concert promoter beat analysts’ first-quarter revenue forecasts.

Motorola Solutions closed 5.2 per cent higher after the communications equipment maker raised its profit forecast for the year.

Booking Holdings rose 3 per cent after reporting better-than-expected first-quarter bookings and revenue. Another online travel company, Expedia Group, didn’t fare as well, despite its latest quarterly results beating Wall Street targets. Its shares slumped 15.3 per cent for the biggest decline among S&P 500 stocks after it lowered its full-year bookings guidance because its Vrbo rental unit has been slow to recover from its migration to Expedia’s platform.

All told, the S&P 500 rose 63.59 points to 5,127.79, while the Dow gained 450.02 points to 38,675.68. The Nasdaq gained 315.37 points to close at 16,156.33.

In Europe, Germany’s DAX gained 0.6 per cent, while the CAC 40 in Paris rose 0.5 per cent and London’s FTSE 100 added 0.5 per cent.

Markets in Tokyo and mainland China were closed for holidays. The Japanese yen strengthened slightly against the dollar.