US stocks made solid gains early Friday after the weak employment report spurred a buying spree amid hopes of a near-term rate cut by the central bank. The S&P 500 gained about 13 points soon after trading started, while the Dow Jones climbed 111 points. Nasdaq was up 36 points during the early trading hours.
The general perception is that the slower-than-expected job growth for May will prompt the Federal Reserve to ease its monetary policy stance and go for a near-term rate cut. Meanwhile, Treasury yields and the dollar index slipped, following the announcement by the Bureau of Labor Statistics.
As per the report, around 75,000 new jobs were created in May, which is sharply below the consensus estimate of economists. In a clear indication that the job market is cooling off, data for the previous two months were revised down. That brings down the monthly average job growth in the last three months to about 151,000.
As per the report, around 75,000 new jobs were created in May, which is sharply below the consensus estimate
However, the unemployment rate stayed steady at the five-decade low of 3.6% in May, as widely expected. The sequential growth in hourly wages eased slightly to 0.2%, compared to the preceding month, while the annual growth fell short of expectations.
Recent data had shown that in May, private employment in the economy expanded at the slowest pace in nearly ten years.
Also read: Retail sales dip as consumers cut spending
The softening labor market conditions underscore the view that economic growth is losing momentum. The unimpressive statistics about the other areas of the economy, such as muted manufacturing growth and continuing decline in home sales, also point to possibile cut in the key interest rates. The uncertainties triggered by the renewed trade tension also calls for a more dovish Fed policy.
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