Markets Rally as Strong Jobs Report Closes Out the Week

Equity markets ended the week in positive territory, marking two consecutive weeks of gains. A key driver behind the rally was Friday’s better-than-expected U.S. jobs report, which boosted investor confidence and reinforced optimism about the economic outlook. Global equities, as measured by the MSCI All Country World Index, gained 1.46% for the week. U.S. equities also performed well, with the S&P 500 Index rising over 1.5% for the week. Overall, Indexes are now trading near their highest levels in more than three months.

U.S. Economy

As noted above, stock indexes recorded their strongest daily gains of the week on Friday, following an employment report that modestly exceeded expectations. The U.S. economy added 139,000 jobs in May, slightly above the consensus estimate of 130,000, while the unemployment rate remained unchanged at 4.2%.

Interest Rates

Following Friday’s jobs report, the bond market reinforced expectations that the U.S. Federal Reserve is unlikely to cut interest rates at its upcoming summer meetings in June and July. Interest rate futures pricing suggests that most investors anticipate two quarter-point rate cuts by year-end, with the first not expected until September, according to the CME Group’s FedWatch tool.

Looking Ahead

A Consumer Price Index (CPI) report scheduled for release on Wednesday will reveal whether the recent trend of moderating inflation continued into May, despite elevated tariffs and ongoing global trade tensions. April’s CPI report showed an annual inflation rate of 2.3%, down from 2.4% in March. Core inflation—which excludes volatile food and energy prices—remained unchanged at 2.8% in April.

As Always

I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.

Author

Mike Horwath

Mike heads the internal Investment Committee that is responsible for the investment direction of the firm. He works closely with Diversified’s financial planners to support the investment side of the lifelong financial planning process. Lastly, it’s Mike’s responsibility to oversee the ever-changing global investment landscape and work with the planners to evaluate the impact on each of our client’s strategies.

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