Exciting Job Growth Powers a Sixth Winning Week in Stocks Following Historic Debt Ceiling Bill Approval

Last updated Jun 2, 2023

Stocks Rise on Positive May Jobs Report and Debt Ceiling Bill

Stocks rose on Friday, May 7th, after traders analyzed the May jobs report and celebrated the passage of a debt ceiling bill that prevents the U.S. from defaulting on its financial obligations. The Dow Jones Industrial Average jumped 395 points, or 1.2%, while the S&P 500 and Nasdaq Composite both climbed 0.8% and 0.6%, respectively.

Week-long Streak for Nasdaq

Stocks finished the week on an upswing. The S&P 500 and Nasdaq both increased by 1.2% and 1.6%, respectively. The Dow also posted gains, rising 1.1%. Perhaps the most remarkable gain was in the Nasdaq, which is on track to finish its sixth straight week higher – the longest streak for the tech-heavy index since 2020.

U.S. Employment on the Rise

Nonfarm payrolls increased more than expected in May, with 339,000 new jobs compared to economist predictions of 190,000. It marked the 29th straight month of positive job growth and a 4.3% year-over-year increase in average hourly earnings. The unemployment rate ticked up slightly to 3.7%.

Impact on Federal Reserve

It remains to be seen how the resilient labor market will affect Federal Reserve policy. Stock market investors appear to be focusing on the wage increase and higher unemployment rate, which show a lesser degree of inflation.

Debt Ceiling Bill Passed

Lawmakers passed a debt ceiling bill late Thursday night that will soon make its way to President Joe Biden’s desk. The Fiscal Responsibility Act was passed by the House on Wednesday, only days before U.S. Treasury Secretary Janet Yellen’s June 5th deadline.

Financial markets had been rattled earlier in the week due to the possibility of the US not reaching a deal, but most investors were confident that an agreement would be reached.

Stocks Pop on Positive Earnings

Many stocks also gained on Friday due to positive earnings reports. Lululemon shares rose 14% on strong results and MongoDB was up over 30% on an optimistic forecast.

All in all, stocks rose on Friday on positive news from the May jobs report and the debt ceiling bill. The Nasdaq was in particular buoyed by six consecutive weeks of gains and positive earnings reports, while the labor market continues to show improvement.