Traders on the floor of the NYSE, June 1, 2023.
Stock futures rose as traders parsed the May jobs report and cheered lawmakers passing a debt ceiling bill that averts a U.S. default.
Nonfarm payrolls grew much more than expected in May, rising 339,000 despite economists polled by Dow Jones expecting a relatively modest 190,000 increase. It marked the 29th straight month of positive job growth.
Recent strong jobs report have pressured stocks on the notion that the resilient labor market will keep the Federal Reserve in hiking mode. But the stock market seemed to like Friday’s numbers, perhaps concentrating on a wage increase that showed lighter-than-expected inflation and an unemployment rate that ticked higher.
Average hourly earnings increased by 4.3% year-over-year, compared to a 4.4% estimate from Dow Jones. The unemployment rate climbed back to 3.7% from 3.4%.
Easing concerns around the U.S. debt ceiling also helped sentiment. The Senate passed a bill to raise the debt ceiling late Thursday night, sending the bill to President Joe Biden’s desk. That comes after the House passed the Fiscal Responsibility Act on Wednesday, just days before the June 5 deadline set by U.S. Treasury Secretary Janet Yellen. Fear that the U.S. may default on its obligations if lawmakers failed to reach an agreement rattled some investors earlier in the week.
“I do think markets were pretty savvy this time: They kind of priced in some sort of resolution, but because we’re taking a tail risk off the table, we’re getting a bit of relief here,” said Mona Mahajan, senior investment strategist at Edward Jones.
As the holiday-shortened trading week draws to a close, both the S&P and Nasdaq are on track to finish with gains of around 0.4% and 1%, respectively. The Nasdaq could notch its sixth straight weekly advance, a streak length not seen since 2020. Both the Nasdaq and S&P 500 finished Thursday’s session at their highest levels since August 2022.
The Dow sits 0.1% lower for the week as of Thursday’s close.