For the week, the Nasdaq was still down 1.5%. The S&P 500 and Dow gained 1.2% and 2.7% respectively over the week.
The jobs report also showed that the unemployment rate ticked up and wages surged. The jump in worker paychecks may not seem like a bad thing, but it tends to set off alarm bells about inflation. And many economists are worried inflation is due to come roaring back because of all the stimulus from Washington.
Still, investors seemed unfazed Friday.
“The Fed is going to have to continue to be in a position to help support the economy,” Mace McCain, president and chief investment officer at Frost Investment Advisors.
He added that anything that keeps the Fed on the sidelines with regards to future rate hikes is good for tech stocks, which have benefited from low interest rates.
But what about inflation concerns? Investors were likely brushing off the uptick in wages because many people in lower-paying jobs in the leisure and hospitality sectors, such as bars and restaurants, have yet to return to full-time work.
That sector did bounce back sharply in April, with 331,000 jobs added. But it remains in a deep hole since Covid-19 forced the economy to essentially shut down last March.
“This report serves as a reminder that while we have come a long way from the depths of pandemic recession, there is still a long road ahead,” said Craig Fehr, an investment strategist with Edward Jones.
Fehr expects wage growth will start to moderate as more workers in lower-paying services sectors return to work.
Other factors at play also might be making the wage data a little noisy.
Thomas Hogan, a senior research fellow at the American Institute for Economic Research, noted that the combination of more people moving from part-time jobs to full-time work as well as labor shortages due in part to generous stimulus checks from the federal government, is artificially boosting worker pay.
That effect should soon pass — and it looks like investors realize that it won’t make the Fed nervous about inflation getting out of control.