Stocks Finish Sharply Higher on a Resilient US Labor Market

The S&P 500 Index ($SPX) (SPY) Friday closed up +1.03%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +1.05%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.99%.  June E-mini S&P futures (ESM25) are up +1.04%, and June E-mini Nasdaq futures (NQM25) are up +0.99%. 

Stock indexes rallied sharply on Friday, with the S&P 500 posting a 3-1/2 month high and the Dow Jones Industrials posting a 3-month high. Stocks settled sharply higher after Friday's better-than-expected US May employment report alleviated concerns of an economic slowdown.  Also, the resumption of US-China trade talks gave stocks a boost after President Trump said that US and Chinese negotiators will resume trade talks on Monday in London. 

Tesla rose more than +3% Friday after plunging -14% on Thursday when President Trump proposed ending government contracts and subsidies for Elon Musk's companies.  Shares of Tesla recovered Friday when Musk, who triggered the public feud by criticizing President Trump's tax bill, signaled he's keen to dial down the hostility.  

US May nonfarm payrolls rose +139,000, stronger than expectations of +126,000, although Apr nonfarm payrolls were revised lower to +147,000 from the previously reported +177,000.  The May unemployment rate remained unchanged at 4.2%, right on expectations.

US May average hourly earnings rose +0.4% m/m and +3.9% y/y, stronger than expectations of +0.3% m/m and +3.7% y/y.

US Apr consumer credit rose +$17.873 billion to a 4-month high, better than expectations of +$10.000 billion.

Fed comments on Friday were mixed for stocks and bonds.  On the bearish side, Cleveland Fed President Hammack said she'd rather wait for further clarity on the economic impact of a variety of policy changes before adjusting interest rates, and now "is not a good time to be preemptive." Conversely, Philadelphia Fed President Harker favors the Fed waiting before cutting rates and said, "I could see in the second half of the year, if things resolve themselves, and we start to see more clarity, and we continue to see inflation coming down to 2%, I could definitely see a rate cut in the offing."

The markets are discounting the chances at 0% for a -25 bp rate cut at the next FOMC meeting on June 17-18.

Overseas stock markets on Friday settled higher.  The Euro Stoxx 50 closed up +0.36%.  China's Shanghai Composite rose to a 2-week high and closed up +0.04%.  Japan's Nikkei Stock 225 closed up +0.50%.

Interest Rates

September 10-year T-notes (ZNU25) Friday closed down -28.5 ticks.  The 10-year T-note yield rose +11.9 bp to 4.510%.  Sep T-notes on Friday gave up an early advance and fell to a 1-week low, and the 10-year T-note yield rose to a 1-week high of 4.512%. T-notes retreated Friday on the hawkish US May payroll report that showed a larger-than-expected increase in nonfarm payrolls and a larger-than-expected increase in average hourly earnings.  T-notes added to their losses Friday on hawkish comments from Cleveland Fed President Hammack, who said she'd rather wait before adjusting interest rates.  T-notes on Friday initially posted modest gains on carryover strength from a rally in 10-year German bunds.   

European government bond yields on Friday were mixed.  The 10-year German bund yield fell -0.7 bp to 2.576%. The 10-year UK gilt yield rose +2.8 bp to 4.644%.

Eurozone Q1 GDP was revised higher to +0.6% q/q and +1.5% y/, stronger than expectations of +0.4% q/q and +1.2% y/y.

Eurozone Apr retail sales rose +0.1% m/m, weaker than expectations of +0.2% m/m.

German Apr industrial production fell -1.4% m/m, weaker than expectations of -1.0% m/m.

ECB Governing Council member Stournaras said, "The bar for another ECB rate cut is high, in July and beyond," and the ECB should pause its interest rate cuts to give officials a chance to assess recent shocks, particularly from trade.

Swaps are discounting the chances at 27% for a -25 bp rate cut by the ECB at the July 24 policy meeting.

US Stock Movers

Chip makers moved higher on Friday to boost the broader market.  Marvell Technology (MRVL) closed up more than +4%.  Also, Analog Devices (ADI), Micron Technology (MU), and ARM Holdings Plc (ARM) closed up more than +2%.  In addition, Applied Materials (AMAT), Lam Research (LRCX), KLA Corp (KLAC), Microchip Technology (MCHP), ON Semiconductor (ON), NXP Semiconductors NV (NXPI), Texas Instruments (TXN), and Qualcomm (QCOM) closed up more than +1%.   

Strength in the Magnificent Seven stocks was a positive factor for the overall market.  Alphabet (GOOGL) closed up more than +3%, and Amazon.com (AMZN) closed up more than +2%.  Also, Apple (AAPL), Nvidia (NVDA), and Meta Platforms (META) closed up more than +1%.  In addition, Microsoft (MSFT) closed up +0.58%.

Energy stocks and energy service providers moved higher on Friday after the price of WTI crude rose more than +1% to a 1-1/2 month high. APA Corp (APA) closed up more than +3%.  Also, Chevron (CVX), Exxon Mobil (XOM), Haliburton (HAL), Baker Hughes (BKR), ConocoPhillips (COP), Devon Energy (DVN), Diamondback Energy (FANG), and Schlumberger (SLB) closed up more than +2%.

Tesla (TSLA) closed up more than +3% after CEO Musk signaled he would cool tensions with President Trump following Thursday's dispute that sank Tesla stock by more than -14% when Musk called for Trump's impeachment and President Trump proposed ending government contracts and subsidies for Elon Musk's companies. 

QXO Inc (QXO) closed up more than +13% after Wolfe Research initiated coverage on the stock with a recommendation of outperform and a price target of $44. 

Quanex Building Products (NX) closed up more than +10% after reporting Q2 net sales of $452.5 million, stronger than the consensus of $439.3 million.

Sarepta Therapeutics (SRPT) closed up more than +9% after Scotiabank upgraded the stock to sector outperform from sector perform with a price target of $80. 

Lululemon Athletica (LULU) closed down more than -19% to lead losers in the S&P 500 and Nasdaq 100 after cutting its full-year EPS estimate to $14.58-$14.78 from a previous estimate of $14.95-$15.15. 

Docusign (DOCU) closed down more than -18% after reporting Q1 billings of $739.6 million, below the consensus of $746.4 billion, and cutting its full-year billings forecast to $3.29 billion-$3.34 billion from a previous forecast of $3.30 billion-$3.35 billion, weaker than the consensus of $3.32 billion.

Vera Therapeutics (VERA) closed down more than -25% after Japanese rival Otsuka gave results from a trial of its experimental therapy for kidney disease that was better than Vera's data. 

ServiceTitan (TTAN) closed down more than -6% after reporting a Q1 loss per share of -51 cents, a wider loss than the consensus of -37 cents. 

Mosaic (MOS) closed down more than -4% after cutting its Q2 phosphates sales volume forecast to 1.5 million to 1.6 million tons from a previous forecast of 1.7 million to 1.9 million tons, well below the consensus of 1.84 million tons. 

Broadcom (AVGO) closed down more than -4% despite reporting better-than-expected Q2 earnings after analysts' said its future forecast isn't seen as strong enough to extend the stock's recent strength. 

MercadoLibre (MELI) closed down more than -3% after Citigroup opened a 30-day downside catalyst watch on the stock, citing the potential risk the company is taking to improve pricing and preserve market share.

Earnings Reports (6/9/2025)

Borr Drilling Ltd (BORR), Calavo Growers Inc (CVGW), Casey's General Stores Inc (CASY), Gencor Industries Inc (GENC), Graham Corp (GHM), Hooker Furnishings Corp (HOFT), Limoneira Co (LMNR), NexPoint Diversified Real Estate Trust (NXDT).