By Gunjan Banerji

U.S. stocks and government-bond yields jumped after the monthly jobs report eased fears about a recession around the corner.

Following weeks of uncertainty about tariffs and their impact on businesses across the U.S., many investors breathed a sigh of relief after the report, which showed the economy added a better-than-expected 139,000 jobs last month. While hiring slowed from the prior month, the data signaled the downturn many feared would materialize during President Trump's trade war hasn't appeared.

"It's consistent with an expanding economy," said Rob Waldner, chief strategist and head of macro research at Invesco, of the latest jobs report. "There's just nothing in the hard data that shows us that there is a big correction coming."

All three major indexes notched gains for the week. The S&P 500 and Dow Jones Industrial Average added 1.5% and 1.2%, respectively. The tech-heavy Nasdaq Composite rose 2.2%.

The Russell 2000 index, which tracks small-cap stocks, outperformed its peers, clinching a 3.2% gain for the week. Smaller companies, which perform much of their business domestically, are often perceived as bellwethers for the U.S. economy.

The recent gains build on a dramatic turnaround for stocks that has helped major indexes recoup their April losses. Shortly after "Liberation Day," stocks tanked and investors started bracing for an imminent downturn because of steep tariffs. Since then, Trump has announced a pause on the levies. And much of the recent economic data that has trickled out has shown that the economy is on solid footing, despite plunging sentiment among American consumers.

Wall Street's so-called fear gauge slipped Friday. The Cboe Volatility index fell to 16.77, its lowest close since February.

And the world's biggest bond investor saw a lot to like in Friday's jobs report.

Rick Rieder, who oversees more than $3 trillion as BlackRock's chief investment officer for fixed-income, said he expects that the Federal Reserve will be able to cut interest rates several times in the second half of the year because the labor market is coming into better balance with less upward pressure on wages.

"Overall, we saw that hiring is still happening at a reasonable, albeit modestly slower pace," Rieder said.

The yield on the 10-year Treasury note rose to 4.507%, up from 4.418% last week. In recent sessions, investors had flocked to government bonds, fearful of a slowdown. That trade unwound on Friday.

The stock rally this week has extended to equities around the world. The Vanguard Total International Stock ETF rose Friday and closed at a record. The fund, which tracks an FTSE index of world stocks that excludes U.S. shares, is up more than 15% for the year, compared with the S&P 500's 2% gain.

Mike Bailey, director of research at FBB Capital Partners, said he's optimistic about the U.S. economy and expects stocks to keep rising. He has also been looking to other markets around the globe.

"We're frankly just looking at valuations," Bailey said.

Investors are also glued to the feud between the president and Elon Musk, after the two men traded verbal jabs Thursday, sparking a steep selloff in Tesla stock. The shares rebounded 3.7% Friday after recording their worst one-day market cap decline on record.

In corporate news, shares of Robinhood Markets have soared 13% this week and roughly doubled for the year as trading volumes on the company's platform continued to surge.

The company became synonymous with the retail-trading frenzy that has gripped markets in recent years, especially when markets are ebullient. Steve Quirk, chief brokerage officer at Robinhood, said this month that stock and options trading at the brokerage has jumped.

The stock's recent rally highlights the optimism that has crept back into markets. Individual investors who bought stocks aggressively during the market swoon this year have been handsomely rewarded. The S&P 500 has recouped its losses for the year and individuals who bought during the "Liberation Day" panic are sitting on even fatter gains.

"Buying the dip continues to work," said Danny Kirsch, head of options at Piper Sandler.

Write to Gunjan Banerji at gunjan.banerji@wsj.com

(END) Dow Jones Newswires

June 06, 2025 17:03 ET (21:03 GMT)

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