Wall Street rebounds on good jobs report, positive tech earnings

MANHATTAN (CN) — Investors have put tariff concerns to the side, instead focusing on employment data that remains positive even as it shows a cooling labor market.

Tariffs continue to cause consternation on Wall Street and Main Street both, with even the U.S. Chamber of Commerce writing a letter this week to the Trump administration asking for suspension of tariffs.

“The Chamber supports many of the president’s policy goals, including eliminating unfair trade and non-trade barriers, and driving American investment,” the group wrote. “At the same time, we have heard from a historic number of small businesses who have made it clear: they need immediate relief from tariffs.”

However, investors have largely grown immune to tariff talk, instead focusing on the positive earnings releases from Meta, Apple, and Microsoft. By the closing bell on Friday, the Dow Jones Industrial Average rose 1,203 points for the week, while the S&P 500 gained 161 points and the Nasdaq netted 595 points.

Positive employment data from the Bureau of Labor Statistics on Friday caused markets to further improve, as the U.S. economy added 177,000 jobs in April. The report was far better than the private sector jobs report by ADP earlier in the week, which showed only 62,000 jobs gained.

However, even the “good” jobs report had some bad elements. “Some of the details of the household employment survey were concerning, including a rise in the share of unemployed who have been permanently laid off and an increase in the duration of unemployment," wrote Nancy Vanden Houten, lead U.S. economist at Oxford Economics.

Vanden Houten noted the jump in transportation and warehouse jobs is likely due to companies looking to stockpile ahead of tariffs, adding that she expects unemployment to reach 4.8% by the end of the year.

Earlier in the week, the latest inflation report by the Bureau of Economic Analysis found that personal consumption expenditures increased by 0.7%. The metric, which is the preferred measure of inflation for the Federal Reserve, notes that “supercore” inflation — which excludes food, energy, and housing — decelerated to 2.98%, the lowest increase since early 2021.

The data has analysts worried about how the Federal Reserve will act. “The Fed is in a tricky spot,” said Bill Adams, chief economist at Comerica Bank. “On the one hand, the economy is downshifting, which argues for lower rates. On the other hand, inflation looks set to pick up.”

The third major economic report for the week — estimated gross domestic product for the first quarter of this year — portended bad news, showing a 0.3% contraction for the U.S. economy instead of the forecast 0.4% expansion.

President Donald Trump was quick to disavow the data, saying it was “Biden’s stock market, not Trump’s” as well as that the effect on GDP “has NOTHING TO DO WITH TARIFFS.”

Most economists differed, noting the chaotic rollout and pullback of tariffs have caused the drop but that the overall U.S. economy is holding up.

“A successful resolution to global trade policy would likely remove most of the volatility and uncertainty currently experienced by businesses and consumers,” said Jeffrey Roach, chief economist at LPL Financial, adding that “the consumer is too strong to speculate the economy has dipped into recession.”

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