Wall Street trading higher as Apple hits new highs

• The Non-Farm Payroll came below estimates at 164K versus 192K in April while wage’s growth year-on-year also came below expectations at 2.6% vs. 2.7% expected.
• Rally in stocks led by Apple as Warren Buffet said he bought 75 million worth of stock in Q1. 

The S&P500 rose 1.2% while the Dow Jones Industrial Average closed 330 points higher while the Nasdaq composite rose about 1.7% thanks to Apple which rose 1.4% and a 2.4% jump in Google-parent Alphabet.

Apple’ stock reached an all-time high after the world-known investor Warren Buffett said that he bought 75 million shares during the first quarter only. "Tech is having a good day and obviously Apple is helping. The Warren Buffett headlines have helped give momentum to share prices," noted Quincy Krosby, chief market strategist at Prudential Financial.

On the macroeconomic side of things, the Non-Farm Payroll report for April came below expectations at 164K versus 192K forecast by analysts. The wages (average hourly earnings) came below forecast as well at 2.6% year-on-year against 2.5% expected. Hourly earnings have been advancing at about a 2.7% pace, which is still the Fed’s target. On the other hand, the unemployment rate fell to 3.9% which is its lowest level since December 2000. The NFP and wage’s growth were far from stellar but appalling to the extent of lowering investor’s expectations for the Federal Reserve Bank to follow through with its policy normalization and hike at least three times in 2018.The average hourly earnings data is closely watched by the Fed as a gauge of inflation.

"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. 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." commented Quincy Krosby.

"I see the unemployment rate getting down to 3.5%, I see us maybe modestly overshooting our 2% inflation target, so there may be a time over the next few years where the federal funds rate is slightly above its long-run neutral rate. You have to think about this in the context of the economic outlook," said recently San Francisco Fed President John Williams

Additionally, on inflation Williams said "from the beginning, we've seen our inflation target being asymmetric one, where we want inflation on average to be 2 percent, sometimes above, sometimes below. I am personally comfortable with the fact that inflation may overshoot that 2% for a while,"

On the geopolitical and trade front, the Treasury Secretary Steve Mnuchin confirmed on Friday that the US trade delegation had constructive discussions with China so far. However, a breakthrough US-China deal remains unlikely at this stage.

"The two questions are: how does the state sponsorship or state-owned enterprises work in a global economy and the more transactional side of the trade equation, the import-export dynamic. The things the Chinese are giving aren't new. They are things they were already going to give. We're looking for new initiatives. We haven't seen a real win yet." said Ben Phillips from EventShares.

It is worth mentioning that the United States is ready to impose further tariffs on Chinese goods if China doesn’t keep up with its commitments, according to the Wall Street Journal.