Thursday's sharp reversal lower for stocks was old news Friday with the main indexes soaring after the March jobs report. The volatility could continue next week, too, with several key events on the horizon.
It's a little confusing as to why stocks rallied today considering this morning's data from the Bureau of Labor Statistics showed the U.S. added 303,000 new jobs in March – well above economists' expectations for 200,000. Additionally, the unemployment rate edged down to 3.8% from 3.9%.
One positive data point helping support calls for the Fed to start cutting interest rates was that average hourly earnings – a measure of inflation – rose at their slowest annual rate since June 2021. Still, the 0.3% month-over-month rise in wages was quicker than the 0.1% increase seen in February.
What's more, yields on both the 2-year and 10-year Treasury yields spiked to the high end of their year-to-date ranges as expectations for a June rate cut dropped (to a 51% chance vs yesterday's 59%, according to CME Group's FedWatch Tool).
Putting all these pieces together would make one assume stocks would extend Thursday's late-day selloff. Yet, at Friday's close, the Dow Jones Industrial Average was up 0.8% at 38,904, the S&P 500 was 1.1% higher at 5,204, and the Nasdaq Composite had jumped 1.2% to 16,248.
"This morning's blowout jobs numbers show that the economy isn't showing any signs of slowing down and consumer spending should be able to hold up in the near term," says Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. While this could be bad for the bond market, stocks can continue to move higher if investors place more importance on strong consumer spending and corporate profits than on the Fed's rate-cut plans, he adds.
Snowflake upgraded to Buy
In single-stock news, Snowflake (SNOW) rose 1.7% after Rosenblatt Securities analyst Blair Abernethy upgraded the tech stock to Buy from Neutral (the equivalent of Hold). The analyst says solid IT spending, accelerating digital transformation trends and a "strong first-quarter performance from the leading cloud service providers" have Snowflake in a position to beat Q1 product revenue growth estimates.
Shares of SNOW – which happens to be a member of the Berkshire Hathaway equity portfolio – have been spiraling since late February when the company announced the departure of its CEO. Analysts remain bullish, though, as evidenced by a consensus Buy recommendation, according to S&P Global Market Intelligence.
Tesla drops on low-cost car reports
Tesla (TSLA), meanwhile, fell 3.6% after a Reuters report suggested the electric vehicle maker is scrapping plans for a low-cost car.
The company has yet to formally comment on the speculation, although in a post on X, his social media platform, Tesla CEO Elon Musk wrote "Reuters is lying (again)."
CPI and earnings season on deck
Looking ahead, there are a few things investors will be paying close attention to next week. One is oil prices. Crude futures are up nearly 22% for the year to date, which "threatens the 'inflation is falling' narrative and has driven expectations higher," says Liz Young, head of investment strategy at SoFi.
Inflation will be front and center on next week's economic calendar, with the March Consumer Price Index (CPI) set for release Wednesday morning.
And finally there's earnings season. While next week's earnings calendar is relatively light, Friday's results from several big banks, including JPMorgan Chase (JPM), mark the start of the first-quarter reporting season.
