Stocks closed sharply higher on Friday and bond yields rose as Wall Street welcomed a surprisingly strong U.S. jobs report.
The S&P 500 rose 1.1%, recouping most of the previous day's loss and moving closer to its record high set last week. The leading index still posted its first weekly loss in three weeks.
The Dow Jones Industrial Average rose 0.8% and the Nasdaq Composite gained 1.2%.
Technology companies played a large part in the rally. Chipmaker Nvidia rose 2.4% and Google parent Alphabet rose 1.3%.
Gains were broad, with every sector in the S&P 500 ending in the green.
US employer According to a government report on Friday, the government unexpectedly hired 303,000 workers in March. The strong labor market has helped boost consumer spending and corporate profit growth, leading to strong economic growth overall.
The robust labor market has also raised concerns about a creeping increase in inflation, which could delay any rate cuts by the Federal Reserve. However, Friday's report showed that wages rose a modest 0.3% this month, putting less upward pressure on inflation, and Wall Street still expects the Fed to start cutting interest rates in June .
Friday's gains followed a late decline in stocks on Thursday after a Fed official spooked investors by questioning whether the central bank even needs to cut interest rates this year given a strong economy.
Treasury yields rose after the jobs report. The yield on the 10-year Treasury note rose to 4.40% from 4.31% just before the report was released. The two-year yield, more in line with Fed expectations, rose to 4.75% from 4.65% just before the report.
The bond market may be signaling concern that interest rates could remain high for longer, but the stock market appears to be accepting the strong jobs report as good news as consumer spending and corporate earnings remain important to investors.
“As long as the market gets one or two rate cuts and the Fed doesn't leave rates unchanged, that's good enough for equity investors,” said Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance.
The Fed's key interest rate remains at its highest level in two decades due to historic hikes to curb inflation. So far, the strategy appears to have worked: overall consumer prices have fallen dramatically since their peak in 2022. Inflation fell to 3.2% in February. In mid-2022 it was even 9.1%.
Strong employment and consumer spending have raised concerns that inflation could fall below 3%, and moving toward the Fed's 2% target will not be easy. They also increase the potential for a revival in inflation.
The Fed and investors will get another important update on inflation next week when the government releases its March consumer price report.
According to CME's FedWatch tool, Wall Street has a slightly better forecast that the Fed will cut interest rates at its June meeting. 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 gained 199.44 points to 16,248.52.
Elsewhere, the market was mostly quiet as the latest round of corporate earnings looks set to gain momentum over the next few weeks.
Johnson & Johnson fell 0.1% after the pharmaceutical giant said it is buying medical device company Shockwave in a deal worth about $13 billion.
Apple rose 0.5% after making the announcement dismissed more than 600 workers in California, marking the first major wave of post-pandemic job losses amid a broader wave of tech industry consolidation. Companies in the technology sector have been reducing their workforces for two years, but the measures have had little impact on the broader labor market.
On the energy markets, the price of US crude oil settled 0.4% higher. The increase is just over 20% so far this year as demand remains robust.
Markets in Europe and Asia declined.
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` business reporters Yuri Kageyama and Matt Ott contributed to this report.
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