Market Snapshot: U.S. stocks edge higher after March jobs data reinforces rate-hike expectations

U.S. stocks see modest gains early Friday as investors sift through a slightly smaller-than-expected rise in nonfarm payrolls in March and a further drop in the unemployment rate. Read More...

U.S. stocks tiptoed higher in early trade Friday after a healthy March jobs report reinforced expectations the Federal Reserve will be aggressive in delivering interest rate increases in its effort to rein in persistently hot inflation.

How are stock indexes trading?

The Dow Jones Industrial Average DJIA, +0.09% rose 02 points, or 0.3%, to 34,770.
The S&P 500 SPX, +0.04% was up 13 points, or 0.3%, at 4,543.
The Nasdaq Composite COMP, -0.02% gained 57 points, or 0.4%, to trade at 14,272.

On Thursday, the Dow tumbled 550.46 points, for a 1.6% decline. The S&P 500 saw a similar fall, while the Nasdaq Composite shed 1.5%. For the quarter, all three benchmarks logged the biggest percentage drops declines since the first quarter of 2020 — 4.6%, 4.9% and 9.1%, respectively.

Read: A dozen S&P 500 stocks just had their worst quarter ever, as tech stocks sloughed off nearly $2 trillion in value

What’s driving the markets?

U.S. stocks were set to shake off the worst quarter in two years with gains on Friday, as investors parsed March jobs figures.

The U.S. created a healthy 431,000 jobs in March and the unemployment rate fell to 3.6% from 3.8%. Economists polled by The Wall Street Journal are forecasting a total payroll gain of 490,000 jobs in March, and a drop in the unemployment rate to 3.7% from 3.8%. Stock-index futures somewhat trimmed gains after the release of the data.

“The unemployment rate tumbled again and at 3.6% in March is just one-tenth away from the best economy in fifty years of joblessness before the pandemic,” Chris Rupkey, Chief Economist at FWDBONDS LLC wrote in a note. “No wonder inflation is out of control. The labor market is at full employment where the costs go up astronomically for companies to bring new workers in to run the factories and work the cash registers across the country.”

“Net, net, the good news is the economy is creating more jobs and putting thousands of Americans to work, the bad news is it is hard for companies to hire unless they boost worker wages and this produces more inflation,” he added.

Treasury yields rose after the data was released, with the yield on the 2-year note moving back above the 10-year rate, inverting that measure of the yield curve. That measure inverted briefly earlier this week. A sustained inversion is viewed by many economists and market watchers as a reliable recession warning sign, albeit with a lag of up to a year or more.

In other U.S. economic data Friday, the S&P Global US Manufacturing
Purchasing Managers’ Index final reading for March was 58.8, up from 57.3 in February. The improvement in the health of the US manufacturing sector was steep overall and the sharpest since last September, Chris Williamson, Chief Business Economist at S&P Global, said. The Institute for Supply Management manufacturing index and construction spending for March is due at 10 a.m.

Investors will also hear from Chicago Federal Reserve President Charles Evans Friday morning.

Investors also kept close watch on the war in Ukraine, with negotiators from both sides expected to hold negotiations via videoconference on Friday. Russia blocked a humanitarian aid convoy from reaching embattled Mariupol, as eastern Ukraine braced for more attacks.

What companies are in focus?

DiDi Group Holding Ltd. DIDI, +24.80% stock climbed 23%, while shares of Biliblii Inc. BILI, +9.66%, Pinduoduo Inc. PDD, +9.17%, iQIYI Inc. IQ, +10.46% and Alibaba Group Holding Ltd. BABA, +6.58% saw solid gains, along with NIO Inc. NIO, +6.72%. Those U.S. listed Chinese stocks surged on a report China authorities will give U.S. regulators full access to auditing reports.
Shares of GameStop Corp. GME, +7.67% surged 9% after the company said it was looking to conduct a stock split for the first time in 15 years.

Read: AMC, GME and meme stocks are back in the spotlight — How will professional traders handle it this time around?

How are other assets trading?

The ICE U.S. Dollar Index DXY, +0.36%, a measure of the currency against a basket of six major rivals, was up 0.2% on Friday.
Gold for June delivery GCM22, -0.88% fell 1.3% to trade below $1,930 an ounce.
Bitcoin BTCUSD, -0.57% was edged up 0.1% to $45,460.
In European equities, the Stoxx Europe 600 SXXP, +0.61% rose 0.6%, and London’s FTSE 100 UKX, +0.41% rose 0.2%.
The Shanghai Composite SHCOMP, +0.94% rose 0.9%, while the Hang Seng Index HSI, +0.19% rose 0.1% and Japan’s Nikkei 225 NIK, -0.56% lost 0.5%.