The Dow finished higher Friday as prospects for an interest rate hike strengthened after a weaker-than-expected jobs report.
U.S. employers added just 75,000 jobs in May, well below the 178,000 gain that economists surveyed by Bloomberg expected. Another concern: Hiring gains for March and April combined were revised down by 75,000, according to the Labor Department Friday.
While this often would spook markets, investors took it as another incentive for the Federal Reserve to cut a benchmark rate in the coming months, making borrowing cheaper for businesses and consumers.
“The miss … and the subsequent revisions lower put July squarely in play for a rate cut,” said Cliff Hodge, director of investments for Cornerstone Wealth, in an email. “The stock markets are banking on the Fed’s ability to step in and save the day, as it has for much of the last decade.”
The Dow Jones Industrial Average leaped 263 points, or 1.02%, to finish at 25,984 on Friday. The broader Standard & Poor’s 500 added almost 30 points, or 1.05%, to close at 2,873. The tech-heavy Nasdaq rose nearly 127 points, or 1.66%, to end trading at 7,742.
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Friday’s gains represented the fourth straight day of increases. Stocks had been boosted earlier this week after Federal Reserve Chairman Jay Powell had signaled the possibility of cutting rates.
The lackluster jobs report could be a sign that businesses are becoming more cautious as economic growth slows and the U.S. engages in multiple trade conflicts.
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But most sectors soared higher. Technology stocks led gains on Friday. Microsoft rose 2.8% and Apple rose 2.66%. Health care companies and internet stocks were also among the largest gainers. Johnson & Johnson rose 1.37% and Facebook rose 2.98%.
Bond prices rose, pushing yields lower, also a sign that the market is worried about economic growth. The yield on the 10-year Treasury fell to 2.08% from 2.12% on Thursday. Banks, which rely on higher yields for profit from loan interest, fell broadly and held back gains for the financial sector.
Investors are also optimistic about prospects for a U.S.-Mexico trade deal. The U.S. is poised to start imposing 5% tariffs on Mexican goods Monday but both sides are negotiating and media reports have suggested that the U.S. could consider delaying the tariffs.
This week’s gains have offset some of the losses from May, when President Donald Trump escalated trade wars with China and Mexico by threatening or imposing new tariffs. That disrupted a strong run by the market to start the year that culminated in the S&P 500 hitting a new high on April 30.
Contributing: The Associated Press