Wall Street ended the week on a high note, with the stock market experiencing its best day in over two months on Friday. Traders were pleased with the cooler-than-expected U.S. employment data, which signaled a potential easing of inflationary pressures on the economy.
The S&P 500 rose 1.3%, erasing its losses for the week, while the Dow Jones Industrial Average climbed 1.2%. The Nasdaq composite saw a 2% increase, driven by strong gains in the technology sector.
The Labor Department reported that the nation added 175,000 jobs in April, a significant drop from the previous month’s increase of 315,000. This lower-than-expected job growth, coupled with less-than-expected rise in average hourly earnings, suggests that inflationary pressures may be easing.
Economists believe that the modest increase in hiring could indicate that the Federal Reserve’s aggressive rate hikes are starting to impact the economy. This may give the Fed room to consider lowering interest rates in the future.
Following the jobs report, Treasury yields in the bond market mostly fell, with the 10-year Treasury yield dropping to 4.5%. The hope is that the U.S. economy can achieve a “soft landing,” where it remains strong enough to avoid a recession but not so strong that it worsens inflation.
Despite signals of high inflation, traders are now betting on fewer interest rate cuts by the Fed this year. The market rally on Friday was widespread, with technology stocks leading the gains. Apple, Microsoft, and Nvidia all saw significant increases in their stock prices.
Several companies also reported strong quarterly results, leading to gains in their stock prices. Amgen, Live Nation Entertainment, Motorola Solutions, and Booking Holdings were among the companies that saw positive outcomes.
Overall, the S&P 500 rose 63.59 points, the Dow gained 450.02 points, and the Nasdaq added 315.37 points. In Europe, major indices also saw gains, while markets in Asia were closed for holidays.
The positive performance of the stock market on Friday reflects traders’ optimism about the potential easing of inflationary pressures and the overall strength of the economy.
