By Christine Idzelis and William Watts
All three major U.S. stock benchmarks closed higher Friday, after a March jobs report reinforced a picture of a healthy economy but also underlined expectations for the Federal Reserve to be more aggressive in hiking interest rates in an effort to rein in persistently hot inflation.
How did stock indexes perform?
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The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.23% gained 139.92 points, or 0.4%, to close at 34,818.27.
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The S&P 500 /zigman2/quotes/210599714/realtime SPX +0.30% added 15.45 points, or 0.3%, to finish at 4,545.86.
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The Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +1.01% rose 40.98 points, or 0.3%, to end at 14,261.50.
On Thursday , the Dow tumbled 550.46 points, for a 1.6% decline. The S&P 500 saw a similar fall, while the Nasdaq Composite shed 1.5%. For the quarter, all three benchmarks logged the biggest percentage drops since the first quarter of 2020 — 4.6%, 4.9% and 9.1%, respectively.
For the week, the Dow fell 0.1%, while the S&P 500 rose 0.1% and the Nasdaq advanced 0.7%. The Dow snapped two straight weeks of gains while the S&P 500 and Nasdaq each advanced for a third straight week, according to Dow Jones Market Data.
What drove the markets?
Major U.S. stock benchmarks ended higher Friday, after a choppy trading session, as investors parsed jobs and manufacturing data against their expectations for the Federal Reserve’s future path of rate hikes.
The U.S. economy created a healthy 431,000 jobs in March and the unemployment rate fell to 3.6% from 3.8%. Economists polled by The Wall Street Journal had forecast a total payroll gain of 490,000 jobs in March, and a drop in the unemployment rate to 3.7% from 3.8%.
“It was a good report,” said Russell Price, chief economist at Ameriprise Financial, in a phone interview Friday. “It’s indicative of a healthy underlying economy.”
Hourly pay rose sharply, pushing the increase in the past 12 months to 5.6%, the highest rate since the early 1980s. Employment in January and February combined is 95,000 higher than previously reported, the Labor Department said.
“For the Fed, today’s report gives them little consolation. With wage growth running so high, inflation fears are only heating up. A 50 [basis point] hike at the next meeting is surely secured. The only question that really remains is how many more 50 bps moves there will be this year,” said Seema Shah, chief strategist at Principal Global Investors, in emailed comments.
See also: The U.S. jobs market is scorching hot. Here’s where the flames are highest
Ameriprise’s Price told MarketWatch that he would not be “surprised” to see the Federal Reserve raise its benchmark interest rate by 50 basis points in May to combat high inflation. Chicago Federal Reserve President Charles Evans said Friday he stills supports a path of steady rates hikes of 25 basis points until next March.
Treasury yields rose after the jobs data was released, with the yield on the 2-year note moving back above the 10-year rate, inverting that measure of the yield curve . That measure inverted briefly earlier this week. A sustained inversion is viewed by many economists and market watchers as a reliable recession warning sign, albeit with a lag of up to a year or more.
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