May’s labor market report crashes market expectations and boosted Wall Street gains and sentiment.
The commodity market rallied on the second day of the month of June. Oil prices jumped by more than 2%. And gold futures hit $2000 for the first time since March.
Meanwhile, the sock market scored higher gains, driven by a better than expected labor market report.
The initial expectations were that hiring numbers in May would experience a slowdown. Marketers forecast that the U.S. will roughly add only 195,000 posts in May.
Beating all expectations, the U.S. labor market had added an estimated 339.000 new jobs in the previous months.
This data shattered all market fears about the tightening labor market and how the Fed’s interest rate policy affects the hiring process. Still, the unemployment rate shows a concerning increase; hourly wages fell and weekly working hours fell.
Despite the mixed report, the data relieved investors and calmed their fears about the labor market. The market is still adding large numbers despite the market turmoil and the global supply chain shortage.
The report came two weeks before the Fed’s next policy meeting. Given that in mind, and according to the CMP Group data, The chances of rising interest rates by 25 basis points have surpassed 70%.
Meaning all hopes for an interest rate hike pause faded with Friday’s labor market report.
Moving to the provided data by Bloomberg, the Friday report was as follows:
Nonfarm payrolls showed an impressive increase of 339,000 jobs, surpassing the estimated 195,000. However, the unemployment rate slightly rose to 3.7%, compared to the projected 3.5%. Average hourly earnings remained in line with expectations, with a month-on-month increase of 0.3%. On a year-on-year basis, average hourly earnings showed a slight decline, growing by 4.3% instead of the anticipated 4.4%.
Additionally, the average weekly hours worked recorded a slight decrease, dropping to 34.3 hours from the projected 34.4 hours. These numbers provide insights into the current state of the job market and its impact on various economic indicators.
Moving to Wall Street and the impact of this strong hiring report, the strong hiring report had led to significant gains.
As of 16:27 am ET
The S&P 500 index was up by 0.9%, reflecting the overall improvement in the job market. The Nasdaq index also experienced a modest increase of 0.57%, indicating positive sentiment among investors. The Dow Jones Industrial Average performed exceptionally well; it jumped by 1.32%.
These gains indicate the market’s confidence in the economy’s growth prospects, as strong hiring numbers often correlate with increased consumer spending and business expansion. Overall, the hiring report played a key role in driving the upward momentum of Wall Street indexes.
Elsewhere, the commodity market rallies; after three consecutive days of losses, oil prices ticked up this Friday. The U.S. West Texas Intermediate Crude Oil was up by 1.92% to $71.74 per barrel.
Bernt oil jumped by 2% to a market price of $75 per dollar, and for gold futures, the index hit $2000 for the first time since March.