Wall Street jumps on jobs report, ASX to rise

Treasury yields climbed following the jobs report. The yield on the 10-year Treasury rose to 4.40 per cent from 4.31 per cent just before the report was released. The two-year yield, which moves more on expectations for the Fed, rose to 4.75 per cent from 4.65 per cent just prior to the report.

The bond market may be signalling concern about interest rates staying higher for longer, but the stock market seems to be accepting the strong jobs report as good news, with consumer spending and corporate profits remaining important for investors.

“As long as the market gets one or two cuts and the Fed doesn’t leave rates unchanged, that’s good enough for equity investors,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

The Fed’s benchmark interest rate remains at its highest level in two decades as a result of historic rate hikes meant to tame inflation. The strategy has seemingly worked so far, with overall consumer prices falling drastically from a peak in 2022. Inflation fell to a rate of 3.2 per cent in February. It was as a high as 9.1 per cent in the middle of 2022.

Strong employment and consumer spending have raised concerns about getting inflation below 3 per cent and heading toward the Fed’s target rate of 2 per cent won’t be easy. They also raise the potential for inflation to reheat.

The Fed and investors will get another key update on inflation next week when the government releases its March report on consumer prices.

Wall Street has a slightly better than even bet that the Fed will trim rates at its June meeting, according to CME’s FedWatch Tool. That’s down from 65.9 per cent on Thursday and 72 per cent a month ago.

All told, the S&P 500 rose 57.13 points to 5,204.34. The Dow added 307.06 points to 38,904.04, and the Nasdaq gained 199.44 points to 16,248.52.

The market was mostly quiet elsewhere with the latest round of corporate earnings set to heat up in the next few weeks.

Johnson & Johnson slipped 0.1 per cent after the pharmaceutical giant said it was buying the medical technology company Shockwave in a deal worth about $13 billion.

Apple edged up 0.5 per cent after announcing that it is laying off more than 600 workers in California, marking its first big wave of post-pandemic job cuts amid a broader wave of tech industry consolidation. Companies in the tech sector have been slashing their workforces for two years, but the actions have had little impact on the broader employment market.

In energy markets, the price of US crude oil settled 0.4 per cent higher. It’s up just over 20 per cent so far this year as demand remains robust.

Markets in Europe and Asia fell.