NEW YORK — Wall Street experienced a robust finish to the week on Friday, largely due to a surprisingly positive report reflecting the state of the U.S. job market, which outpaced prior expectations.
All sectors within the S&P 500 recorded gains, ensuring a second straight week of growth for the index. This performance marks a significant rebound from a downturn seen two months prior, pushing the index closer to its historical peak.
The S&P 500 climbed by 61.06 points, or 1%, reaching a level of 6,000.36, now just 2.3% below its record high. Meanwhile, the Dow Jones Industrial Average increased by 443.13 points, equaling a 1% rise to reach 42,762.87. The tech-heavy Nasdaq rose by 231.50 points, or 1.2%, to settle at 19,529.95.
Technology stocks played a pivotal role in these widespread gains, with notable performances from significant players. Nvidia, the renowned chipmaker, saw its shares ascend by 1.2%, while Apple, the giant behind the iPhone, enjoyed a 1.6% rise.
Electric vehicle maker Tesla rebounded by 3.7%, recouping some of the substantial losses it faced earlier in the week after a public dispute between President Donald Trump and Elon Musk on social media.
Circle Internet Group, known for issuing a leading cryptocurrency, saw its stock rise by an impressive 29.4%, following a massive 168% surge after its debut on the New York Stock Exchange just a day prior.
Although hiring in the United States decelerated last month, employers added a solid 139,000 jobs, demonstrating the labor market’s resilience amidst the prevailing uncertainties brought about by the ongoing trade war under President Trump’s administration. These figures dispel some concerns that tariffs on products exchanged with key trading partners might have a more damaging effect.
“For now, things appear to be operating smoothly,” commented Chris Zaccarelli, the Chief Investment Officer of Northlight Asset Management. “Investors regard this positively, although the full repercussions of the tariffs are yet to be realized.”
However, the persistent tariffs led by President Trump have been a point of concern for businesses. Lululemon Athletica, a prominent yoga apparel brand, saw its shares plummet by 19.8% after adjusting profit expectations to mitigate the tariffs’ impact, exacerbated by rising competition from emergent brands.
Numerous companies, spanning retail to aviation, have alerted investors about potential revenue and profit dips due to tariffs escalating costs and potentially curbing consumer spending.
The possibility of Trump easing tariffs following successful trade agreements with other nations has been a key factor in the S&P 500’s vigorous recovery, countering a 20% drop observed two months ago. The upcoming trade talks in London between senior U.S. officials and a Chinese delegation could be crucial.
The U.S. economy is already feeling the tariff repercussions on various goods from primary trade partners, including raw materials like steel. Continued or heavier tariffs could adversely affect businesses and consumers in the near future.
Notably, the U.S. economy contracted in the first quarter. Furthermore, surveys conducted by the Institute for Supply Management revealed contractions in both American manufacturing and services in the previous month. On Tuesday, the Organization for Economic Cooperation and Development adjusted its forecast for U.S. economic growth to 1.6% for the current year, down significantly from last year’s 2.8%.
The uncertainty surrounding tariffs and their economic impacts places the Federal Reserve in a challenging position.
“All things considered, it’s evident they are in a holding pattern,” Zaccarelli added.
The Federal Reserve has opted to keep its benchmark interest rate unchanged as inflation fears persist with tariff implications. They have previously battled to bring inflation towards their 2% objective, employing rate increases, maintaining levels just above this target.
The Fed has been wary of cutting rates in 2025, following three rate cuts late last year. While reduced rates could boost the economy, they could also ignite higher inflation, which could be particularly harmful if tariffs simultaneously raise business and consumer costs.
Wall Street anticipates that the Federal Reserve will maintain steady rates in its June meeting, although traders forecast potential rate cuts to support economic growth later in the year.
Significant movements occurred in the bond market, as Treasury yields advanced notably. The yield on 10-year Treasury notes increased to 4.51% from Thursday’s 4.39%. Similarly, the two-year Treasury yield, aligned closely with traders’ projections for the Fed’s actions on short-term rates, grew to 4.04% from 3.92%.
Meanwhile, European markets mostly recorded gains, indicating a broader global market rally.