Strong jobs report boosts Wall Street

U.S. stock markets open higher after a better-than-expected jobs report, while the Fed holds rates steady. Analyze the economic impact.

The Street is experiencing an upward opening this Friday, driven by a U.S. labor market report that, while showing a slowdown in hiring, exceeded economists' expectations and reinforces expectations that the Federal Reserve will keep interest rates steady.

The labor market report released today indicated that U.S. employers added 139,000 jobs in June. While this figure represents a slowdown in job growth compared to the previous month, it was considered "solid" and exceeded the 200,000 new positions expected by economists. The unemployment rate, meanwhile, rose slightly to 4.1%. It is important to note that employment figures for the previous two months were revised downward, adding a nuance to the perception of "solidity."

In response to this data, the S&P 500 index rose 1% in early trading on Friday, the Dow Jones Industrial Average added 429 points (1%), and the Nasdaq Composite advanced 1.2%. Treasury yields also rose, with the 10-year note yield climbing to 4.47%.

Moderating job growth and a slight increase in the unemployment rate, combined with annual inflation that slowed to 2.3% in April, give the Federal Reserve the confidence to hold interest rates steady at its June meeting. Expectations point to possible rate cuts later in 2025, contingent on evolving inflation risks and the resilience of the labor market.

The apparent contradiction between a slowdown in job growth and a positive reaction from Wall Street can be explained by understanding that "solidity" for the market lies not in explosive growth, but in a scenario that allows the Federal Reserve to maintain its current monetary policy and consider future rate cuts. This is perceived as favorable for investment, as it reduces borrowing costs and stimulates economic activity. In this context, the slowdown is a welcome factor if it avoids the need for further upward adjustments in interest rates.

Despite the lingering uncertainty generated by President Trump's trade wars and the imposition of new tariffs, consumer confidence rebounded in May. It's worth noting that tariffs on steel and aluminum were doubled to 50% on June 4. Although these measures were expected to increase inflation, their pass-through to consumer prices has been modest so far.

The persistence of high tariffs and uncertainty in trade relations represent a latent risk to inflation and economic growth, even though their impact on consumer prices has been limited so far. This suggests that current economic stability could be fragile and highly dependent on evolving trade policies. The US economy operates under constant tension between favorable macroeconomic data and geopolitical and trade risks. Any escalation in trade tensions could destabilize inflation and growth, directly affecting Federal Reserve policy and market confidence.