U.S. stocks edged higher Friday, rebounding after the previous session’s selloff even after the release of stronger than expected jobs growth in March, potentially harming the case for early Federal Reserve interest rate cuts.
At 09:35 ET (13:35 GMT), Dow Jones Industrial Average rose 45 points, or 0.1%, S&P 500 rose 18 points, or 0.4%, and NASDAQ Composite rose 60 points, or 0.4%.
Despite these gains, the main Wall Street indexes were still on track for steep weekly losses on Thursday–with the Dow set for its worst weekly performance since March 2023–hit by a mix of rising geopolitical tensions–specifically between Israel and Iran–as well as hawkish comments from Federal Reserve officials.
Nonfarm payrolls grow more than expected in March
Data released earlier Friday showed that nonfarm payrolls increased by 303,000 jobs in March, more than the expected 212,000 gain.
The unemployment rate came in at 3.8%, a fall from 3.9% the prior month, while average earnings rose 0.3% on a monthly basis, in line with expectations.
Inflation and the strength of the labor market are the two biggest considerations for the Fed in cutting interest rates, with any signs of cooling in the two giving the central bank more impetus to cut rates early.
However, nonfarm payrolls figure has consistently surprised to the upside in recent months, indicating that the U.S. labor market remains strong.
Inflation data for March is due next week, and is likely to provide more cues on the path of interest rates.
Fed officials wax hawkish
A slew of Fed officials have warned this week that sticky inflation could potentially delay the bank’s plans to cut rates.
Minneapolis Fed President Neel Kashkari said on Thursday that sticky inflation could even see the Fed not cut interest rates at all in 2024.
Kashkari’s comments, which came late during Thursday’s session, triggered the sharp pullback on Wall Street.
Earlier on Thursday, Richmond Fed President Thomas Barkin warned that the central bank had more headroom to keep rates steady while it gauged progress against inflation.
Redundancies at Apple
In corporate news, Apple (NASDAQ:AAPL) stock rose 0.4% after the iPhone maker announced it is laying off more than 600 workers in California, its first major job losses since the pandemic.
Johnson & Johnson (NYSE:JNJ) stock fell 0.5% after the drug giant announced it will buy medical device maker Shockwave Medical (NASDAQ:SWAV), up 1.6%, in a $12.5 billion deal.
HubSpot (NYSE:HUBS) stock rose 4% after Reuters reported that Google-owner Alphabet (NASDAQ:GOOG) has been talking to its advisers about the possibility of making an offer for the online marketing software company with a market value of $35 billion.
Crude soars to five-month highs
Oil prices edged higher, climbing to their highest level in five months as worsening geopolitical tensions in the Middle East raised concerns over tightening supply.
By 09:35 ET, the U.S. crude futures traded 0.5% higher at $87.03 a barrel, while the Brent contract climbed 0.7% to $91.24 per barrel.
Both benchmarks have risen to their highest levels since October, and are set to notch gains of more than 2% this week, climbing for a second straight week.
Iran, the third-largest OPEC producer, has vowed revenge against Israel for an attack on Iran’s embassy in Syria on Monday, and Israel has vowed to defend itself.
A broader outbreak of war in the Middle East potentially heralds more supply disruptions for oil, and could further tighten markets in the coming months.
Expectations of tight markets were furthered by the Organization of Petroleum Exporting Countries and allies maintaining its current pace of production cuts this week, while ongoing Ukrainian drone attacks on refineries in Russia may have disrupted more than 15% of Russian capacity, a NATO official said on Thursday.
