- Stocks soared on Friday after an upbeat April jobs report gave investors hope for a rate cut sooner rather than later.
- Expectations have been boosted in recent weeks following a series of closely watched economic indicators.
- The U.S. economy added 175,000 jobs last month, lower than the expected 238,000.
U.S. stocks soared on Friday after a weak April jobs report pushed bond yields lower and raised the possibility that the Federal Reserve will cut interest rates later this year.
The U.S. economy added 175,000 jobs in April, well below the 238,000 expected by economists and far short of March’s 303,000 job gain. Meanwhile, the unemployment rate rose from 3.8% to 3.9%.
A weak jobs report would give the Fed more flexibility in cutting rates sooner, and bond yields have fallen sharply with this sentiment in mind. The 10-year Treasury bond fell 10 basis points to 4.48%.
Investors are closely monitoring economic data and the Fed’s response to them for signs of when the central bank may cut interest rates. Expectations for a rate cut have been waning in recent weeks as notable statistics have been released. In the market, negative economic news becomes positive for risk assets such as stocks.
“April’s employment report was exactly what the market told us to do,” Russell Price, chief economist at Ameriprise, said in a client note. “Job growth was solid and well-diversified, but at a much slower pace than the surprisingly strong growth seen in the first quarter.”
George Mateyo, chief investment officer at Key Wealth, added in comments to Business Insider that Friday’s jobs report was “the first significant ‘downside surprise’ in more than two years.” “However, this weakness was not weak enough to signal an improvement in the labor market. It was the slowdown that the Fed and many market participants had been hoping for for some time.”
Also contributing to Friday’s boost was Apple, which rose about 7% after reporting a better-than-feared second-quarter earnings report. The iPhone maker also launched a historic $110 billion stock buyback program and increased its quarterly dividend by 4%, drawing cheers from investors.
Here are the U.S. indexes as of 10:30 a.m. Friday:
Here’s what else happened Friday.
In Commodities, Fixed Income and Cryptocurrencies:
- West Texas Intermediate crude oil fell 0.08% to $78.89 per barrel. The international benchmark Brent crude oil rose 0.11% to $83.76 per barrel.
- Gold rose 0.06% to $2,311.20 per ounce.
- The yield on the 10-year US Treasury note fell 10 basis points to 4.48%.
- Bitcoin rose 3.49% to $61,148.
