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(Reuters) – The benchmark S&P 500 edged higher on Friday as the latest monthly jobs report signaled resilience in the U.S. economy, supporting an aggressive tightening policy by the Federal Reserve.
The Labor Department’s closely watched employment report showed that U.S. labor market was rapidly tightening while the rate of unemployment was dropping.
U.S. employers added 431,000 jobs in March. While the numbers fell short of economists’ expectations, the jobless rate dropped to 3.6%, the lowest since February 2020 and average hourly earnings increased 0.4%.
“None of the information in today’s report helps the Fed with the difficult task ahead and, if anything, the risk of faster tightening from the Fed in the near term remains highly conceivable,” said Charlie Ripley, senior investment strategist for Allianz (DE:ALVG) Investment Management.
Traders now see a 72.8% chance of a 50-basis point interest rate hike in May. The U.S. central bank last month increased it by 25 basis points for the first time since 2018 and policymakers have signaled readiness for aggressive rate hikes to combat decades-high inflation.
Another set showed U.S. manufacturing activity unexpectedly slowed in March as tight supply chains continued to drive input prices higher.
Seven of the 11 major S&P 500 sectors advanced in early trading, led by gains in energy and material stocks.
Rate-sensitive banks such as Bank of America (NYSE:BAC), Goldman Sachs (NYSE:GS), JPMorgan Chase & Co (NYSE:JPM), Morgan Stanley (NYSE:MS) and Citigroup (NYSE:C) slipped between 0.4% and 0.8%.
U.S. Treasury yields jumped and a closely watched part of the yield curve reinverted after the jobs data supported the view that the Fed will need to aggressively hike rates to stem soaring inflation. [US/]
At 11:01 a.m. ET, the Dow Jones Industrial Average was down 5.40 points, or 0.02%, at 34,672.95, the S&P 500 was up 4.58 points, or 0.10%, at 4,534.99, and the Nasdaq Composite was up 60.05 points, or 0.42%, at 14,280.57.
The indexes ended the first quarter on Thursday with their biggest quarterly decline in two years as concerns persisted about the continuing conflict in Ukraine and its inflationary effect.
Video game retailer GameStop Corp (NYSE:GME), which was at the center of a social-media fueled trading frenzy last year, rose 4.5%, following its plan to seek shareholder approval for a stock split.
Among megacaps, Apple (NASDAQ:AAPL) edged 0.6% lower after J.P. Morgan removed the stock from its analyst ‘focus list’.
Advancing issues outnumbered decliners by a 1.41-to-1 ratio on the NYSE and a 1.64-to-1 ratio on the Nasdaq.
The S&P index recorded five new 52-week highs and seven new lows, while the Nasdaq recorded 46 new highs and 81 new lows.
