On Friday, US stocks experienced a significant surge following the release of new data indicating a considerable slowdown in job growth in the country. The blue-chip Dow saw a rise of 450 points, equivalent to a 1.2% increase, while the S&P 500 and the Nasdaq also recorded gains of 1.3% and 2%, respectively.
The Bureau of Labor Statistics reported that the US economy added only 175,000 new jobs in April, falling short of economists' expectations of 235,000 jobs and the previous month's addition of 315,000 jobs. The unemployment rate also saw a slight increase from 3.8% to 3.9%.
While the slowdown in job growth may be concerning for Main Street, it was welcomed on Wall Street. The Federal Reserve has been aiming to slow down the economy by raising interest rates to combat inflation. A less robust job market could potentially allow the central bank to maintain elevated interest rates without risking a recession. Conversely, a weakening labor market might prompt the Fed to consider a rate cut.
Investors reacted positively to the employment data, with expectations for more interest rate cuts by the Federal Reserve increasing. The likelihood of at least one rate cut after the September meeting now stands at nearly 75%, up from around 62% just a day earlier. Treasury yields also dropped in response to the news, with the 10-year yield falling to 4.5%.
Following the recent Fed policy decision to keep interest rates unchanged, Chair Jerome Powell emphasized the central bank's readiness to respond to unexpected labor market fluctuations. In earnings news, Apple's shares surged by 6% after the company reported strong earnings for the first quarter of 2024 and projected exceeding sales estimates for the year.
