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Dow closes 330 points higher on Buffett's big stake in Apple

CNBC logo CNBC 5/4/2018 Thomas Franck and Alexandra Gibbs

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Stocks rose sharply Friday as Wall Street shrugged off lackluster numbers in the government's monthly jobs report while shares of Apple led blue-chip stocks higher.

The Dow closed up 332 points, thanks to a 3.9 percent rally in Apple, which jumped after Warren Buffett revealed that he purchased 75 million shares during the first quarter.

The S&P 500 rose 1.3 percent, buoyed by consumer staples and information technology. The Nasdaq rose 1.7 percent on strength in Apple, Facebook and Google parent Alphabet.

The Labor Department reported that the economy added 164,000 jobs in the month of April, lower than the 195,000 expected by economists polled by Reuters. Average hourly earnings growth also missed, rising only 0.15 percent against expectations of a 0.2 percent gain.

Despite the miss in the number of jobs added, the government said the unemployment rate fell to 3.9 percent, an 18-year low.

"I was surprised we had a bit of a sell-off there," said JJ Kinahan, chief market strategist at TD Ameritrade. "You're a little bit light on the top line, and a little bit disappointing on the wage growth, but there was very little job loss and a revision higher from what was considered a very disappointing read last month."

Changes in the average hourly earnings numbers are closely watched by members of the Federal Reserve as a bellwether for inflation. Hourly earnings have been increasing at about a 2.7 percent pace, which is above the recovery pace but still short of where Federal Reserve officials are targeting.

Still, the average hourly earnings miss wasn't large enough to derail fears of more aggressive tightening from the Fed, TD Ameritrade's Kinahan added.

Those who fear rising rates "can find something in here to say it's good enough to keep down the path to four hikes this year," he said. "The other thing is, after we had that big down move yesterday and then came back, there's a bit of a natural pressure early in the day."

Despite anemic numbers early Friday, Apple jumped sharply after longtime investor Warren Buffett revealed that he bought 75 million shares during the first quarter, which added to the conglomerate's already massive stake in the tech giant, "brought down our cash position moderately."

Apple has "a wide, wide gap. I mean it's an amazing business," Buffett told CNBC's Becky Quick in an interview that aired Friday. "You can put all of their products on a dining room table."

Buffett estimated that Berkshire Hathaway's cash position dipped to "a little over" $100 billion because of lots of stock buying in the first three months of the year.

"We bought more stocks by a considerable margin than we sold in the first quarter," Buffett added.

The technology company has been trying to cope with softer iPhone sales, a key product for the Cupertino, California firm. In its earnings report this week, iPhone sales were still up from a year ago, and Apple CEO Tim Cook said in a statement that customers "chose iPhone X more than any other iPhone each week in the March quarter."

The early moves in U.S. stocks came as markets across the globe showed a mixed picture. On Thursday, U.S. stocks finished relatively mixed, after the Dow Jones industrial average erased a nearly 400-point loss during the session, on the back of strong earnings.

On Friday, markets in the Asia-Pacific region closed mostly lower, while in Europe, stocks edged higher during the session.

Several central bank officials are set to deliver remarks Friday.

San Francisco Fed President John Williams will be in Stanford, California, for a lunch keynote at the Hoover Institution's Currencies, Capital, and Central Bank Balances: A Policy Conference. Other Fed officials are due to deliver remarks at the same event, including Dallas Fed President Robert Kaplan.

Members of the United States' delegation will continue trade negotiations in China.

Treasury Secretary Steve Mnuchin said Friday that the U.S. trade delegation had had positive talks with China so far, Reuters reported. A breakthrough deal between the nations on altering China's economic policies, however, is unlikely.

The United States is prepared to impose further tariffs on Chineseproducts if Beijing walks away from its commitments, according to a reporter at the Wall Street Journal.

In a tweet posted Friday, Lingling Wei, a China economics correspondent at the Wall Street Journal, said the U.S asked China to reduce its trade surplus by at least $200 billion by year-end 2020.


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