U.S. stock markets closed higher on Friday, propelled by a stronger-than-expected jobs report and renewed hopes for a U.S.-China trade deal, easing concerns about economic slowdown amid recent trade tensions.
The S&P 500 crossed the 6,000 threshold for the first time since February 21, driven by robust gains in technology stocks, while the Dow Jones Industrial Average and Nasdaq Composite also posted significant advances.
The Dow Jones Industrial Average climbed 442.88 points, or 1.05%, to 42,762.62. The S&P 500 rose 61.02 points, or 1.03%, to 6,000.32, marking its highest level in over three months.
The tech-heavy Nasdaq Composite gained 231.50 points, or 1.20%, closing at 19,529.95. For the week, the S&P 500 advanced 1.5%, the Dow 1.17%, and the Nasdaq 2.18%, reflecting broad market optimism.
Jobs Report Bolsters Confidence
The Labor Department reported that nonfarm payrolls increased by 139,000 jobs in May, surpassing economists’ expectations of 130,000, as polled by Reuters. This followed a downwardly revised 147,000 jobs added in April. The unemployment rate held steady at 4.2%, aligning with forecasts.
The solid data alleviated fears of an economic slowdown, which had been stoked earlier in the week by weaker-than-expected private payrolls and services sector surveys. “The jobs report was a pleasant surprise, signaling resilience in the labor market despite trade uncertainties,” said Jamie Cox, managing partner at Harris Financial Group. “It gives the Federal Reserve room to maintain its cautious approach to rate cuts.”
Traders adjusted their expectations for Federal Reserve policy following the report, with interest rate futures indicating no immediate rate cuts at the central bank’s upcoming meeting later this month.
Analysts now anticipate that the Fed may wait until September for the next rate reduction, with only one additional cut projected by the end of the year. Lindsay Rosner, head of multi-sector fixed income investing at Goldman Sachs Asset Management, noted, “The Fed will likely stay on hold this month. A softening labor market would be needed to justify further easing.”
Trade Talks Spark Market Rally
Investor sentiment was further buoyed by news of upcoming trade discussions. President Donald Trump announced that three cabinet officials will meet Chinese representatives in London on June 9 to negotiate a potential trade deal.
The announcement follows a Thursday call between Trump and Chinese leader Xi Jinping, which failed to resolve key issues but set the stage for further talks. “The market is quick to rally on any hint of a trade deal,” Cox remarked. “But the real challenge is whether these talks will yield a concrete agreement or just more promises.”
The prospect of easing trade tensions, particularly after weeks of disputes over critical minerals and tariffs, contributed to the market’s upward momentum. The S&P 500 and Nasdaq had already posted their largest monthly percentage gains in May since November 2023, driven by optimism over Trump’s softened trade rhetoric and strong corporate earnings.
Tech Stocks and Tesla Rebound
Technology stocks led Friday’s rally, with megacap companies driving significant gains. Amazon shares rose 2.7%, while Alphabet climbed 3.25%. Tesla shares rebounded 3.8%, recovering some losses from a 15% plunge on Thursday triggered by a public feud between Trump and Tesla CEO Elon Musk. Trump had threatened to sever government contracts with Musk’s companies, raising concerns among investors.
However, not all stocks shared in the gains. Broadcom fell 5% after its quarterly revenue forecast disappointed investors, despite strong demand for its networking and AI chip solutions. Lululemon shares plummeted 19.8% after the sportswear company lowered its annual profit forecast, citing increased costs from Trump’s tariffs.
Market Breadth and Trading Activity
Market breadth was positive, with advancing issues outnumbering decliners by a 2.14-to-1 ratio on the NYSE and a 2.52-to-1 ratio on the Nasdaq. The S&P 500 recorded 20 new 52-week highs and no new lows, while the Nasdaq saw 86 new highs and 38 new lows. Trading volume was lighter than average, with 14.5 billion shares exchanged compared to a 20-session average of 17.8 billion.
Other Notable Movers
Wells Fargo shares gained 1.9% after S&P Global upgraded its outlook on the bank to “positive” from “stable.” The upgrade follows the recent lifting of a $1.95 trillion asset cap on the bank, signaling regulatory confidence in its progress.
WHAT YOU SHOULD KNOW
Despite Friday’s rally, the S&P 500 remains about 2% below its record highs from February. Investors are now focused on the upcoming Federal Reserve meeting and the U.S.-China trade talks in London. While the jobs report and trade optimism have provided a near-term boost, analysts caution that unresolved trade issues and potential economic headwinds could temper the market’s trajectory.
