On Friday, Wall Street surged back to reclaim record highs following the release of a stronger-than-expected jobs report for May. Non-farm payrolls rose by 272,000 units, surpassing economists’ consensus of 180,000 and marking a significant increase from the previous month’s figure of 165,000. Additionally, hourly wages exceeded expectations, with a year-on-year growth rate of 4.1% compared to the anticipated 3.9%. However, unemployment came in slightly higher than expected at 4%, versus the forecasted 3.9%.
The robust labor market data prompted a reassessment in rate-cut expectations, with traders dialing back on the possibility of a rate cut in July and lowering bets on cuts in September, now expecting only one cut by year-end. Consequently, there was a notable increase in bond yields, with Treasury yields rising approximately 10 basis points across various maturities. This led to significant declines in fixed-income markets, with the iShares 20+ Year Treasury Bond ETF (TLT) dropping 1.8%.
Despite the surge in bond yields, investors chose to focus on the positive aspects of the jobs report, interpreting a stronger job market as indicative of a resilient economy. This renewed optimism helped reignite the rally in risk assets, propelling both the S&P 500 and the Nasdaq 100 index to fresh all-time highs. However, blue chips remained flat, while small-cap stocks experienced a decline of 0.8%.
The U.S. dollar index (DXY) rallied 0.8%, marking its strongest session since late April. This uptick in the dollar exerted downward pressure on commodities, resulting in significant declines in gold and silver prices, which fell 2.6% and nearly 6%, respectively. Meanwhile, Bitcoin remained relatively flat at $70,880.
In terms of market performance, the Nasdaq 100 and the S&P 500 both rose by 0.3%, while the Dow Jones increased by 0.1%. However, the Russell 2000, which represents small-cap stocks, saw a decline of 0.8%.
Among individual stocks, GameStop Corp. (GME) plummeted over 30% after missing quarterly results, failing to rally despite the start of a YouTube livestream by Keith Gill, also known as the “Roaring Kitty.” AMC Entertainment Holdings Inc. (AMC) also fell nearly 15%. Mining-related stocks, including Newmont Corp. (NEM), Agnico Eagle Mines Limited (AEM), and Freeport-McMoRan Inc. (FCX), experienced significant declines ranging from 4.5% to 6.9%.
Overall, the day’s market movements reflected a mix of optimism fueled by the strong jobs report and concerns surrounding rising bond yields and inflationary pressures. Investors will continue to monitor economic data and corporate earnings reports for further insights into the direction of the market.