US stocks end sharply higher, jobs data strengthens case for rate cuts

All three indexes notched their second straight Friday-to-Friday gains, capping a week in which markets were encouraged by Fed Chair Jerome Powell's more dovish-than-expected statements following Wednesday's rate decision.

The Labor Department's employment report showed the U.S. economy added fewer jobs than expected, while the unemployment rate ticked higher and wage growth unexpectedly cooled.

The report likely hit the sweet spot for the Fed, offering signs the labor market is softening, which Powell has deemed necessary to inflation on a sustainable downward path. The report also provided assurances on U.S. economic health.

The report prompted investors to raise bets the Fed would implement its first rate reduction in September.

"The investor narrative remains the Fed and interest rates and today's weak jobs report puts rate cuts firmly on the Fed's 2024 agenda," said Greg Bassuk, CEO at AXS Investments in New York. "And while 'higher for longer' remains the roadmap, this economic data is being warmly embraced by investors, Wall Street and Main Street, across all sectors"

Fed officials weighed in on the data.

Fed Governor Michelle Bowman reiterated her willingness to hike rates if inflation progress reverses, and Chicago Fed President Austan Goolsbee said the employment report boosted confidence the economy is not overheating.

"Let's remember, it's early May; we shouldn't pretend that the year's over or somehow every card has been played," said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York. "But I don't think for a second that any Fed official really believes that a rate hike is appropriate given current conditions and data."

First-quarter earnings season is approaching the final stretch, with 397 of the companies in the S&P 500 having reported as of Friday morning. Of those, 77% have posted consensus-beating results, according to LSEG data.

Apple surged 6.0%, after the company unveiled a record $110 billion share buyback program and beat quarterly expectations.

Shares of biotech firm Amgen jumped 11.8% after encouraging interim data on its experimental weight-loss drug MariTide and first-quarter earnings.

Travel platform Expedia cut its full-year revenue growth forecast, sending its shares sliding 15.3%.

The Dow Jones Industrial Average rose 450.02 points, or 1.18%, to 38,675.68, the S&P 500 gained 63.59 points, or 1.26%, to 5,127.79 and the Nasdaq Composite added 315.37 points, or 1.99%, to 16,156.33.

Of the 11 major sectors in the S&P 500, all but energy ended the session in positive territory, with technology claiming the largest percentage gain at 3.0%.

Advancing issues outnumbered declining ones on the NYSE by a 3.62-to-1 ratio; on Nasdaq, a 2.00-to-1 ratio favored advancers.

The S&P 500 posted 21 new 52-week highs and one new low; the Nasdaq Composite recorded 95 new highs and 65 new lows.

Volume on U.S. exchanges was 10.72 billion shares, compared with the 11.07 billion average for the full session over the last 20 trading days.