US stocks jumped on Friday after the latest nonfarm payrolls data came in above expectations, easing concerns about an impending economic slowdown.
Nonfarm payrolls rose by 139,000 in May, the US Bureau of Labor Statistics said, beating Dow Jones’ forecast of 125,000, although lower than the revised figure for April of 147,000. The unemployment rate remained steady at 4.2%.
“Today’s jobs report should not be taken as a signal for the Federal Reserve to cut interest rates,” said Eric Merlis, Managing Director and Co-Head of Global Markets at Citizens. “The unemployment rate was unchanged and while other indicators show the labor market is softening, demand for labor remains solid as businesses adjust to policy changes.”
A series of data releases earlier this week have signaled a possible economic slowdown, raising questions about the impact of multilateral tariff negotiations and the next direction for the Federal Reserve, which is scheduled to meet to set interest rate policy on June 17-18.
On Thursday, the Labor Department reported that jobless claims for the current period beat expectations, with new applications coming in at 247,000, compared with a Dow Jones consensus estimate of 236,000. A day earlier, ADP reported that private sector employment rose by just 37,000 in May, well below the 110,000 forecast.
U.S. service sector activity also unexpectedly weakened last month. Data from the Institute for Supply Management on Wednesday showed the ISM services index fell to 49.9%, below the Dow Jones forecast of 52.1% and well below the 50% threshold that separates expansion and contraction.
The move in futures markets came as major indexes were still posting modest gains for the week. The S&P 500 and Dow are up 0.5% and 0.1% respectively so far this week, while the Nasdaq Composite is up nearly 1%.
However, in Thursday's trading session, the S&P 500 fell 0.5% and the Nasdaq fell 0.8% as Tesla shares plunged 14% following CEO Elon Musk's spat with President Donald Trump on social media. The Dow Jones, which does not include Tesla, fell 108 points, or less than 0.3%.
