The world’s largest technology companies drove stocks higher, with traders gearing up for Friday’s jobs report. Bonds climbed, while the dollar dropped the most in 2024.

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In late hours, Apple Inc. climbed after said sales declined less sharply than feared last quarter, helped by stronger-than-expected demand in China, sparking optimism that the company’s slowdown may be easing.

In the run-up to the monthly employment report, data showed U.S. labour costs jumped the most in a year as productivity gains slowed, adding to risks inflation will remain elevated. Economists surveyed by Bloomberg forecast a 240,000 gain in nonfarm payrolls, which would be the slowest pace since November.

The United States Federal Reserve decided Wednesday to leave the target range for the benchmark rate at 5.25 per cent to 5.5 per cent following a slew of data that pointed to lingering price pressures. Yet Chair Jerome Powell said it’s unlikely that the Fed’s next move would be to raise rates.

“While the Fed appears to have all but ruled out a rate hike, it also made clear it’s willing to keep rates higher for longer,” said Chris Larkin at E-Trade from Morgan Stanley. “The markets will be hungry for any data suggesting the economy isn’t heating up any more than it did in the first quarter.”

The S&P 500 topped 5,060, while the Nasdaq 100 added 1.3 per cent. Qualcomm Inc., the world’s biggest seller of smartphone processors, surged on an upbeat forecast. EBay Inc. slumped on a disappointing outlook. Treasury 10-year yields fell five basis points to 4.58 per cent.

A survey conducted by 22V Research shows that 30per cent of the investors polled think Friday’s jobs report will be “risk-on,” 27 per cent expect a “risk-off” reaction, and 43 per cent said “mixed/negligible.” Among the labour indicators, the tally showed investors will be paying the most attention — by far — to average hourly earnings.

“Markets will likely still react more to a weaker print than strong data as investors have turned more hawkish,” said Oscar Munoz and Gennadiy Goldberg at TD Securities. “However, the recent string of upside surprises to economic data is unlikely to be sustained for long as expectations continue to reset higher.”

The options market is betting that stocks will swing widely after Friday’s U.S. jobs report, which traders expect will offer more clarity on how much the Fed may cut interest rates this year.

The S&P 500 is expected to move 1.2 per cent in either direction after the release, based on the cost of at-the-money puts and calls expiring Friday, according to Stuart Kaiser, Citigroup Inc.’s head of U.S. equity trading strategy.

That figure, based on the prices of S&P straddles as of Wednesday’s close, is the largest implied swing ahead of an employment report since March 2023, he said.

After Wednesday’s Fed decision to hold rates, the length of the current pause reached 280 days — which remains the second-longest on record, according to Ryan Grabinski at Strategas Securities.

“Longer pauses have been constructive for equities,” Grabinski said. “The longest pause from June 2006 to September 2007 was associated with the best equity-market return. We are reaching the point where a Fed cut is probably more likely to mean issues are perking up.”

Meantime, Bank of America Corp.’s Savita Subramanian says a sturdy economy will sustain the bull-market run in U.S. stocks even without Fed rate cuts.

“I think we’re going to a soft landing, with a reasonable market environment, maybe better growth ahead than what we’re used to, higher rates and a little bit higher inflation,” Subramanian said Thursday on Bloomberg Television.

Hedge funds are turning increasingly defensive as uncertainty around geopolitics and the path of interest rates, as well as the stock market’s April swoon, has investing pros spooked.

Positioning data shows that hedge fund added defensive equity positions to their portfolio in April at the fastest pace in eight months, while still being net sellers of global stocks, according to figures compiled by Goldman Sachs Group Inc.’s prime brokerage desk. That snaps a four-month streak of buying. Health care saw the biggest inflows, while consumer discretionary stocks had the largest net selling in seven months, according Goldman’s data.

With assistance from Ryan Vlastelica and Jessica Menton.

Bloomberg.com