Stocks rose solidly on Friday and bond yields rose as Wall Street cheered surprisingly strong U.S. jobs data.
The S&P 500 rose 1.1%, offsetting most of the day's losses and nearing its all-time high set last week. The benchmark index still posted its first weekly decline in three weeks.
The Dow Jones Industrial Average rose 0.8%, and the Nasdaq Composite Index rose 1.2%.
Technology companies accounted for the lion's share of the rise. Semiconductor giant Nvidia rose 2.4%, while Google's parent company Alphabet rose 1.3%.
The gains were broad-based, with all sectors of the S&P 500 finishing in the green.
U.S. employers added an astonishing 303,000 workers to their payrolls in March, according to a government report Friday. A strong job market fueled growth in consumer spending and corporate profits, resulting in strong overall economic growth.
The strong job market has also raised concerns that inflation could gradually rise and the Federal Reserve could delay lowering interest rates. But Friday's report showed wage growth was modest for the month at 0.3%, upward pressures on inflation have eased, and Wall Street still expects the Fed to start cutting interest rates in June.
Friday's gains came after Federal Reserve officials questioned whether the central bank needed to cut interest rates this year amid a strong economy, spooking investors. This followed a decline.
U.S. Treasury yields rose following the jobs report. The yield on the 10-year U.S. Treasury rose to 4.40% from 4.31% just before the report was released. The two-year bond yield, which is driven largely by expectations for the Fed, rose to 4.75% from 4.65% just before the report.
While bond markets may be signaling concerns that interest rates will remain high for an extended period of time, stock markets are using strong employment figures as good news as consumer spending and corporate profits remain important to investors. seems to be accepted as such.
“Unless the market cuts rates one or two times and the Fed doesn't keep them on hold, that's good enough for equity investors,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.
The Fed's benchmark interest rate is at its highest level in 20 years, a result of historic interest rate hikes aimed at curbing inflation. The strategy appears to be working so far, with overall consumer prices falling significantly from their 2022 peak and inflation falling to 3.2% in February. By mid-2022, it will reach 9.1%.
Strong employment and consumer spending have raised concerns that inflation will not easily fall below 3% and move toward the Fed's 2% target interest rate. It also increases the likelihood that inflation will reheat.
The Fed and investors will get another important update on inflation next week when the government releases its March consumer price report.
Wall Street is slightly ahead of expectations that the Fed will cut interest rates at its June meeting, according to CME's FedWatch tool. That's down from 65.9% on Thursday and 72% a month ago.
Overall, the S&P 500 rose 57.13 points to 5,204.34. The Dow rose 307.06 points to 38,904.04, and the Nasdaq rose 199.44 points to 16,248.52.
Other markets were mostly quiet as the latest corporate results were expected to pick up steam in the coming weeks.
Johnson & Johnson fell 0.1% after the pharmaceutical giant announced it would acquire medical technology company Shockwave in a deal worth about $13 billion.
Apple rose 0.5% after it said it would lay off more than 600 employees in California, the first major wave of post-pandemic layoffs amid broader restructuring of the technology industry. Companies in the tech sector have been cutting jobs for the past two years, but the measures have had little impact on the broader job market.
In the energy market, US crude oil prices settled at 0.4% higher. Prices have risen more than 20% this year as demand remains strong.
European and Asian markets fell.
Information for this article was contributed by Yuri Kageyama and Matt Ott of The Associated Press.
FILE – A pedestrian walks in front of the New York Stock Exchange building on March 25, 2024 in New York. April 5, 2024, as investors focused on key U.S. jobs data to be released later in the day to gauge the health of the economy and see what action the Federal Reserve will take on interest rates. World stock prices were mostly down on Friday. (AP Photo/Frank Franklin II, File)