- Stocks make gains at midday
- US jobs report tops expectations
- Later interest rate cuts more likely
4:20pm: Market rebounds
Stocks closed higher on Friday as investors digested another red-hot jobs report.
At the close, the Dow Jones had gained around 0.8% to reach 38,904 points, the S&P 500 jumped 1.1% at 5,204 and the Nasdaq ran 1.2% higher at 16,249.
“The March employment report appears consistent with the Fed's - and our - view that the US continues to receive positive supply effects from a rebounding labor force that is allowing the economy to grow at a solid pace while not generating overheating effects,” analysts at Bank of America wrote.
“That said, labor market conditions remain tight and any Fed cutting cycle will need to maintain a restrictive policy stance to bring the labor market into better balance. In other words, rate cuts should be gradual, and the real policy rate should remain positive.”
Despite the market enthusiasm, anxiety remains over the Federal Reserve's stance on interest rate cuts, exacerbated by rising oil prices and geopolitical tensions in the Middle East.
Oil prices remained elevated on Friday due to escalating Israel-Iran tensions, with Brent crude hovering near $91 a barrel and West Texas Intermediate just below $87.
Occidental Petroleum was heavily traded on Friday, closing 2.4% higher, as was Exxon Mobil with a 1.4% gain.
Other trending tickers included Trump Media, which investors appeared to tire of after a much-hyped debut last week. The stock shed another 12.1% on Friday to finish at $40.59.
12:12pm: Investors weigh up jobs report
US stocks moved higher as investors took Friday’s hot jobs report in their stride and pared back their rate cut expectations.
At midday, the tech-laden Nasdaq led the gains, up 1.5% at 16,292 points.
The S&P 500 added 1.3% at 5,213 points and the Dow Jones was up 1% at 38,968 points.
“US rates rose and the market pared back expectations for Fed easing after the stronger-than-expected employment data,” Bank of America Securities analysts wrote.
“The market now sees the likelihood of a June cut at 50% to 55%, and total 2024 total cuts have fallen to 67 basis points (2.6 to 2.7 total 25 basis point cuts).”
The analysts wrote that, while it may be difficult to accept that an economy that adds 303,000 jobs is consistent with rate cuts, the Fed has embraced the supply-side narrative.
“Specifically, the Fed seems to have come around to the view that a rebound in the labor force allows for higher short-run potential growth and faster actual growth while generating disinflationary pressures,” they wrote.
“In this case, the latter came through softer wage growth, with the year-on-year change in average hourly earnings falling two-tenths to 4.1%.”
The BofA analysts added that the jobs data, while exceptionally strong, remains consistent with their monetary policy outlook.
“We still expect the Fed to start a gradual cutting cycle in June, but it will depend on a moderation in the inflation data,” they wrote.
9.41am: Wall Street opens higher
US stocks have defied the overarching concerns that a rate cut may not come until later in the year and have instead opened higher.
The Dow Jones lifted 46 points to 38,643, while the Nasdaq jumped 58 points to 16,108.
The S&P 500 is also in the green, up 16 points to 5,165.
Non-farm payrolls revealed that 303,000 new jobs were created in March, better than the 200,000 listed and highlighting that the US economy is recovering better-than-expected and therefore may not require an early rate cut.
However, some analysts believe that if a string of layoffs begins it could make things worse.
Daniel Casali, chief investment strategist at Evelyn Partners said" The risk for markets is that layoffs and unemployment start to pick up sharply from here.
"Under this scenario, this could lead to a collapse in consumer and business confidence that drives down economic growth. For now, this risk looks contained."
8.36am: US stocks to open higher despite strong jobs data
Wall Street is scheduled to open higher on Friday despite the US seeing more jobs added than expected in March,
303,000 new jobs were added in March, marking a sign of an improving economy but coming as a sharp blow to the prospects of interest rate cuts.
Non-farm payrolls from the Labor Department came in ahead of forecasts that 214,000 new jobs would be added.
An overly strong job market has always been cautioned by the Fed as a potential catalyst for inflation and could limit the scope of rate cuts.
The Dow Jones is set to open 94 points higher at around 39,014, while the S&P 500 is positioned to open up by 19 points at 5,216.
The Nasdaq is looking to open around 73 points higher at 18,150.