Stocks finished solidly higher and bond yields rose on Friday as Wall Street welcomed a surprisingly strong U.S. jobs report.
The S&P 500 rose 1.1%, offsetting most of the previous day's loss and approaching its all-time high set last week. The benchmark still posted its first weekly loss in three weeks.
The Dow Jones Industrial Average rose 0.8% and the Nasdaq composite gained 1.2%.
Technology companies accounted for a large part of the rally. Chipmaker giant Nvidia rose 2.4% and Google parent company Alphabet rose 1.3%.
Gains were broad, with all S&P 500 sectors finishing in the green.
American employers added a surprising 303,000 workers to its payrolls in March, according to a government report Friday. The strong labor market has helped boost consumer spending and business profit growth, which equates to strong economic growth overall.
The strong labor market has also raised concerns about rising inflation, which could delay any rate cut by the Federal Reserve. However, Friday's report showed wages rose a modest 0.3% for the month, putting less upward pressure on inflation, and Wall Street still expects the Federal Reserve to begin cutting rates in June.
Friday's gains followed a slide in stocks late Thursday after a Fed official rattled investors by questioning whether the central bank needs to cut rates this year amid a strong economy.
Treasury yields rose after the jobs report. The 10-year Treasury yield rose to 4.40% from 4.31% just before the report was released. The two-year yield, which moves the most based on the Federal Reserve's expectations, rose to 4.75% from 4.65% just before the report.
The bond market may be expressing concern about interest rates staying high for longer, but the stock market appears to be accepting the strong jobs report as good news, and consumer spending and corporate profits continue. being important for investors.
"As long as the market gets one or two cuts and the Fed doesn't leave rates unchanged, that's enough for stock investors," said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.
The Federal Reserve's benchmark interest rate remains at its highest level in two decades as a result of historic rate increases aimed at controlling inflation. The strategy has apparently worked so far, as overall consumer prices have fallen sharply from a peak in 2022. Inflation fell to a rate of 3.2% in February. It reached 9.1% in mid-2022.
Strong employment and consumer spending have raised concerns that inflation is below 3% and it will not be easy to approach the Federal Reserve's target rate of 2%. They also increase the possibility that inflation will overheat.
The Federal Reserve 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 higher bet that the Federal Reserve will cut rates at its June meeting, according to CME's FedWatch tool. That's down from 65.9% on Thursday and 72% a month ago.
In total, 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 largely quiet elsewhere and the latest round of corporate results will intensify in the coming weeks.
Johnson & Johnson fell 0.1% after the pharmaceutical giant said it was buying medical technology company Shockwave in a deal valued at about $13 billion.
Apple rose 0.5% after announcing that it is the dismissal of more than 600 workers in California, marking its first major wave of post-pandemic job cuts amid a broader wave of tech industry consolidation. Tech companies have been cutting their workforces for two years, but the actions have had little impact on the broader labor market.
In energy markets, the price of US crude oil rose 0.4%. It is up just over 20% so far this year as demand remains strong.
Markets in Europe and Asia fell.
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AP Business writers Yuri Kageyama and Matt Ott contributed to this report.
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