US stocks rise even as bond yields jump after strong labor market data

  • U.S. stocks rose on Friday as markets digested a strong jobs report that signaled resilience in the economy.
  • Bond yields rose after the data as it suggested Fed rate cuts may not be coming anytime soon.
  • But the labor market growth "occurs against a backdrop where wage growth is moderating," said a JPMorgan economist.

U.S. stocks rose on Friday as markets digested a strong jobs report that tested convictions of imminent rate cuts by the Federal Reserve.

Data for November showed 199,000 jobs were added to the US economy, up from 150,000 in October, while unemployment fell to 3.7% from 3.9% the previous month. Following the release, bond yields rose, with the 10-year Treasury yield hitting 4.23%.

While the labor market's resilience points to economic strength that calms recession fears, it does suggest that markets may have overestimated how quickly the Federal Reserve could cut rates.

"The Fed has been hampered by better-than-expected data releases, but as long as inflation continues to decline, the Fed will likely remain on hold," said Quincy Krosby of LPL Financial. "But if today's report is a harbinger of continued consumer spending, the Federal Reserve may have to issue a considerably more aggressive message and telegraph that they cannot yet declare victory in their campaign to quell inflation."

Meanwhile, JPMorgan's chief US economist believes the strong employment data is not a sign of a prolonged fight against inflationary pressures.

"We are seeing, broadly speaking, a cooling of wage pressures," Michael Feroli said in an episode of the Global Data Pod podcast on Friday. "So one might worry that this still resilience in the labor market is creating a problem for inflation, but in reality it is happening in a context where wage growth is moderating to a more sustainable level."

Here is where the US indices were when the market closed at 4:00 pm on Friday:

Here's what else is happening:

In commodities, bonds and cryptocurrencies:

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