The SPDR S&P 500 ETF Trust (NYSE:SPY) traded lower by 0.5% Friday morning after the Labor Department reported strong U.S. jobs market numbers from April.
The U.S. added 428,000 jobs in April, beating consensus economist estimates of 400,000 jobs. The U.S. unemployment rate remained at 3.6%, slightly missing the 3.5% level economists had projected. The labor participation rate dropped 0.2% to 62.2% and remains below its 63.4% pre-pandemic rate in February 2020.
Wages were up 5.5% from a year ago and by 0.3% from March.
The Labor Department also revised February’s total job growth lower by 36,000 jobs to +714,000 and March’s job growth lower by 3,000 jobs to +428,000. The combined revisions totaled 39,000 fewer jobs.
The leisure and hospitality industry led the job creation in April, adding 78,000 positions. Unfortunately, employment in the leisure and hospitality industry is still down by 1.4 million jobs since February 2020.
Related Link: Federal Reserve Raises Interest Rates By 0.5% For First Time In More Than 2 Decades
Voices From The Street: Robert Schein, chief investment officer at Blanke Schein Wealth Management, said the tight labor market and rising wages are contributing to the Federal Reserve's plans to aggressively raise interest rates.
"The stock market isn't thinking about how the economy has performed in recent months, but instead what the economy will look like over the next 6-12 months, as the Federal Reserve's upcoming rate hikes may push the economy into a recession," Schein said.
John Lynch, Chief Investment Officer for Comerica Wealth Management, said Friday's report suggests "economic growth with less wage pressure," a dynamic that might ease inflation fears.
"Investors need confidence that the Fed won’t raise too aggressively and topple the economy into recession in their fight against inflation," Lynch said.
Joseph Brusuelas, principal and chief economist for RSM US LLP, said rising wages are pulling Americans back into the workforce.
"Rising wages, it turns out, are an effective mechanism to attract labor back to the workforce, and the data imply that the labor force participation rate has improved from 61.7% one year ago to 62.2% which is a remarkably strong increase reflecting a hot labor market necessitating a response out of the Fed, which is now squarely focused on price stability as its primary policy goal," Brusuelas said.
