Stocks surged significantly on Friday following a softer-than-expected April jobs report, raising optimism that the Federal Reserve may soon consider lowering interest rates.
The Dow Jones Industrial Average rose 450.02 points or 1.18% to close at 38,675.68. Meanwhile, the S&P 500 jumped 1.26% to end at 5,127.79, marking its best performance since February. The Nasdaq Composite also rallied, climbing 1.99% to finish at 16,156.33.
Closing the week on a positive note, the Dow and Nasdaq saw increases of 1.14% and 1.43% respectively, while the S&P 500 gained 0.55%.
The April nonfarm payrolls report, indicating an addition of 175,000 jobs, fell short of the 240,000 jobs projected by economists surveyed by Dow Jones. The unemployment rate also inched up to 3.9% from the previous month’s 3.8%, as reported by the Bureau of Labor Statistics. Wage data came in lower than anticipated, providing a hopeful indication for inflation.
Traders responded to the weaker job growth and moderated wage gains in April by anticipating a second rate cut before year-end. Market data from Fed funds futures trading reveals an almost 50% chance of a 25 basis point rate reduction in September, according to CME Group’s FedWatch tracker of futures market pricing.
Additionally, following the labor report, rates decreased, with the 10-year Treasury yield briefly dropping below 4.5%. This movement favored rate-sensitive megacap technology stocks, with Nvidia and Advanced Micro Devices seeing gains of over 3%. Companies like Microsoft and Meta Platforms also experienced a 2% increase each, while the S&P’s information technology sector surged by 3%.
