Stock market news

Stocks and bonds rally after a softer jobs report - U.S. equity markets rose more than 1% on Friday with the Nasdaq outperforming as the 10-year Treasury yield fell sharply in response to a weaker than expected jobs report. The moves in the TSX and Canadian yields were more muted. U.S. payroll gains and wage growth both slowed, helping solidify Chair Powell's message earlier in the week that the Fed is not looking to hike rates despite the lack of progress in inflation so far this year. Further boosting investor sentiment, shares of Apple rallied more than 7% after the company's earnings exceeded low expectations for the quarter*. The company also announced a record $110 billion stock buyback. The U.S. dollar fell against major currencies as markets started pricing back in two Fed rates cuts for the year*. Elsewhere, WTI oil finished the week below $80/barrel and posted its sharpest weekly pullback since February*.

^*FactSet

Between a barrage of earnings, the first-quarter U.S. GDP report, and the release of the Fed's preferred measure of inflation, investors had plenty to digest as markets continue to navigate a bumpy start to the second quarter. While new data flooded in, the narrative stayed largely unchanged in our view, and stocks recovered half of the April losses on the back of tech strength. Corporate profits are rising and the economy continues to chug along, though at a slower pace. But inflation pressures persist in the U.S., driving rates higher. We think this backdrop remains favourable for equities, despite the higher volatility associated with Fed-policy uncertainty. However, it likely delays the rebound in bonds, which we think is still coming later this year. We offer our take on last week's developments, along with portfolio implications.

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