'Breathing sigh of relief' after jobs data: U.S. stocks end week at multi-month highs
The May jobs report was better than expected, allaying concerns of imminent economic slowdown
Major U.S. equity indexes ended trading on Friday, June 6, at their highest levels since February, with the S&P 500 returning to the 6,000-point level. Stocks were supported by employment data that exceeded expectations, easing investor concerns about the risk of an imminent slowdown in the U.S. economy. Additional support came from anticipation of renewed trade talks between the U.S. and China, which are scheduled to continue next week in London.
Details
The S&P 500 was up 1% on Friday, breaking above the psychologically important 6,000-point threshold for the first time since late February. By the close of trading, the index still remained more than 2% below its February record high.
The Dow Jones Industrial Average added 1% and ended the session at 42,763 points.
The Nasdaq Composite climbed 1.2% to 19,530 points. The gains were supported by Tesla, whose shares rose 3.7% after tumbling the previous day. Microsoft extended gains for a second consecutive session, reaching a new record high of $470.40 per share.
The Russell 2000 outperformed broader benchmarks, jumping 1.7% to 2,132 points.
Yields on U.S. Treasuries declined, while the dollar strengthened, Bloomberg reported.
Wall Street’s so-called "fear gauge," the VIX, fell to 16.77 points, marking its lowest closing level since February, according to the Wall Street Journal.
Triggers
According to official data, the U.S. economy added 139,000 nonfarm jobs in May. The figure exceeded the Dow Jones forecast of 125,000 but was below the downwardly revised April reading of 147,000. The unemployment rate remained unchanged at 4.2%, CNBC reported.
The data helped ease concerns about a rapid deterioration in labor demand as companies contend with higher costs stemming from Trump's tariffs and the prospect of slower economic activity, notes Bloomberg.
Following the data release, Trump renewed calls for the Fed to cut interest rates by a full percentage point, stepping up pressure on Chair Jerome Powell.
“Europe has had 10 rate cuts, we have had none. Despite him, our Country is doing great. Go for a full point, Rocket Fuel,” Trump wrote on social media on Friday.
Stocks were also buoyed by optimism that trade tensions between the U.S. and China may be easing, after Trump said negotiations between the two sides would resume on Monday.
What analysts say
“The nonfarm payrolls report came in better than expected,” Anthony Saglimbene, chief market strategist at Ameriprise, said in an interview with CNBC. “It’s showing that the labor market is holding up very well in spite of kind of some slowing growth trends.”
Saglimbene added that uncertainty remains over how higher duties will affect inflation, noting that the impact of tariffs is likely to become more visible in economic data over the summer.
“Markets are kind of holding judgment about what all this means for growth and profitability over the next couple quarters, so we’re kind of back to where we were in February,” he said.
“A solid jobs report reinforces the ‘slowly slowing’ economic narrative,” Adam Hetts at Janus Henderson Investors, was quoted by Bloomberg. “Today’s news is positive, but ongoing tariff uncertainty means the subsequent hard data releases over the summer will be extremely important for clarity.”
“While it may not be firing on all cylinders, it’s far from showing signs of a major breakdown,” Bloomberg quotes Bret Kenwell at eToro as saying. “Today’s solid labor report buys the Fed more time, but Chair Jerome Powell may have a hard time justifying a restrictive rate policy should inflation continue lower.”
“For the Fed, there is little urgency to cut rates,” Seema Shah of Principal Asset Management was quoted by Bloomberg. “Holding on until the trade mist clears will reduce the risk of a policy misstep. We expect the first rate cut to come in late-2025.”
Jeffrey Roach, chief economist at LPL Financial, argues: “the slowdown in the job market has been quite smooth so far without many surprises. If payroll growth trudges on like this, the Fed will likely remain in ‘wait and see’ mode. Markets breathed a sigh of relief after this morning’s payroll release.”
