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US Equity Indexes Rise as Resilient Payrolls Validate Fed's Patience With Monetary Policy Action

1:43 PM ET 06/06/2025 - MT Newswires

The Nasdaq Composite jumped 1.3% to 19,543.7, the S&P 500 climbed 1% to 5,996.1, and the Dow Jones Industrial Average advanced 0.8% to 42,674.1. Among sectors, energy, communication services, and consumer discretionary led the gainers.

Nonfarm payrolls rose 139,000 in May, the Bureau of Labor Statistics reported Friday. The consensus was for a gain of 126,000 in a Bloomberg-compiled survey. Gains were revised down by 30,000 to 147,000 for April and slashed by 65,000 for March. The unemployment rate was steady at 4.2% in May, matching market views and representing the third consecutive month at that level.

"Nonfarm payrolls remained resilient last month despite heightened trade policy uncertainty," TD Economics senior economist Thomas Feltmate said in a note, referring to negotiations underway after Trump announced punitive import duties globally. While the downward revisions took "some of the shine off the headline payrolls print, it's fair to say that the labor market is holding up better than expected," he said.

West Texas Intermediate crude oil futures jumped 1.8% to $64.51 a barrel.

Gold futures fell 0.8% to $3,346.51 per ounce.

The CME's FedWatch tool showed a 17% probability that the Federal Reserve will cut the target range for its federal funds rate to 4% to 4.25% in July from the current 4.25% to 4.50%, ending its policy pause. That likelihood stood at 30% a day ago.

Most US Treasury yields rose, with the 10-year surging 9.9 basis points to 4.49% and the two-year rate 11.3 basis points higher at 4.04%.

The 10-year yield moved higher after payrolls, while market pricing for Fed cuts in 2025 declined on Friday, according to a note from Macquarie. Such movements occurred because of elevated concerns in the market about the health of the economy following soft economic data releases this week, including the ISM services PMI, Beige Book, and ADP employment.

"Looking ahead, we expect the labor market to struggle, but not deteriorate sharply," David Doyle, head of economics at Macquarie, said in the note. "One source of resiliency that may prevent a steep rise in unemployment is low labor force growth stemming from a curtailment of immigration and elevated retirements."

According to the FedWatch Tool, the probability of a rate cut in September is currently 53%, almost in line with a day earlier.

In company news, Lululemon Athletica's (LULU) shares plunged 20% intraday, the worst performer on the S&P 500 and the Nasdaq. The company issued overnight Q2 and full-year earnings per share guidance below analysts' expectations.

Among the top gainers on the two indexes was Tesla (TSLA), up 5.9% intraday. Investors are monitoring a potential truce between President Donald Trump and Tesla Chief Executive Elon Musk following their public spat on social media on Thursday when the electric automaker's shares closed down a whopping 14%.