U.S. stocks closed higher on Friday, with the S&P 500 and Nasdaq Composite reaching new all-time highs. All three major indices posted weekly gains, marking the sixth consecutive week of advances for both the S&P 500 and the Nasdaq. The April non-farm payrolls report exceeded expectations. Following a clash between U.S. and Iranian forces in the Strait of Hormuz, U.S. President Donald Trump stated that the ceasefire agreement remains in effect.
The Dow Jones Industrial Average rose 12.19 points, or 0.02%, to close at 49,609.16. The Nasdaq Composite gained 440.88 points, or 1.71%, to finish at 26,247.08. The S&P 500 increased by 61.82 points, or 0.84%, to settle at 7,398.93.
For the week, all three major U.S. stock indices recorded gains. The Dow rose 0.22% over the week. The S&P 500 advanced 2.33%, marking its sixth straight week of gains. The Nasdaq surged 4.51%, also achieving its sixth consecutive weekly increase.
Data released Friday by the U.S. Bureau of Labor Statistics showed that non-farm payrolls increased by 115,000 in April, surpassing the Dow Jones survey economists' expectation of 55,000. The U.S. unemployment rate held steady at 4.3%, matching forecasts.
Markets continued to monitor developments in U.S.-Iran tensions. Following the clash in the Strait of Hormuz, oil prices edged slightly higher, with West Texas Intermediate crude futures rising 0.1%.
Both the U.S. and Iran accused the other of firing first. U.S. Central Command stated that as three U.S. Navy destroyers transited the waterway, U.S. forces "intercepted an unprovoked Iranian attack and responded in self-defense."
U.S. President Donald Trump posted on Truth Social Thursday night, stating, "Three destroyers suffered no damage, but the Iranian attackers suffered significant losses." He was also reported as saying the ceasefire agreement remains valid, calling the strikes on Iranian targets "just a small reminder."
According to Iranian state media, a senior Iranian official stated that Iran will not allow the U.S. to reopen the Strait of Hormuz through "unrealistic plans." The official added that Iran will not let the U.S. exit the conflict without paying war reparations.
U.S. Secretary of State Marco Rubio told reporters on Friday that the U.S. "should get some news today" regarding Iran's response to a peace proposal. This followed reports from Iranian state media that Iran was reviewing a message received from the U.S. through Pakistani mediators but had not yet reached a conclusion.
Driven by a strong earnings season, U.S. stocks have continued to climb in recent trading sessions, with all three major averages on track for weekly gains. Robust tech earnings have put the Nasdaq on pace for a 2.8% weekly gain. The S&P 500 is projected to rise 1.5%, while the Dow has gained only 0.2% so far this week, lagging behind.
Ma Yongyu, Chief Investment Strategist at PNC Asset Management, expects this strong earnings momentum to continue. He noted that it is significant that the gains are very broad. Looking ahead to the second, third, and fourth quarters, markets and analysts still expect year-over-year earnings growth of about 20% or higher for these periods, so the momentum is not expected to fade.
Despite the better-than-expected April non-farm payrolls data, U.S. Treasury yields fell on Friday, reflecting the market's nuanced interpretation of this "Goldilocks" jobs report.
As of Friday morning Eastern Time, the yield on the 10-year U.S. Treasury note fell about 3 basis points to 4.31%, retreating from an early high of 4.36%. The 2-year Treasury yield declined about 2 basis points to 3.95%. Bond yields move inversely to prices.
Contradictory Interpretation of Jobs Data: Data from the U.S. Bureau of Labor Statistics on Friday showed non-farm payrolls increased by 115,000 in April, far exceeding the Dow Jones survey economists' expectation of 55,000. The unemployment rate held steady at 4.3%.
Typically, strong employment data pushes yields higher, as it may signal an overheating economy and rising inflationary pressures, prompting the Federal Reserve to maintain a tight policy stance. However, the decline in yields this time is attributed to: First, details of the report showed moderate wage growth, with average hourly earnings rising only 0.3% month-over-month and 4.1% year-over-year. Second, the labor force participation rate remained at 62.5%, alleviating concerns about a wage-price spiral. Analysts pointed out this is a "Goldilocks" report—employment growth is sufficient to support economic expansion, but wage growth is not strong enough to trigger further monetary policy tightening from the Fed.
Geopolitical Factors Easing: Additionally, growing market expectations of a potential peace deal between the U.S. and Iran, coupled with several days of declining oil prices, have eased inflation concerns. Brent crude has fallen below $100 per barrel, retreating more than $20 from conflict highs. This has also provided support to the bond market.
Market Outlook: A portfolio manager at Brandywine Global suggested that as long as geopolitical tensions do not deteriorate sharply, U.S. Treasury yields may have peaked for some time. However, if wage growth accelerates or service-sector inflation remains persistently high in the coming months, the Fed may be forced to reassess its interest rate path, potentially putting upward pressure on yields.
Looking ahead, market focus will shift to next week's Consumer Price Index data for further confirmation of inflation trends. If upcoming inflation data is moderate, the 10-year Treasury yield may test the 4.20% support level. Conversely, if core CPI unexpectedly rises, yields could quickly rebound above 4.50%.
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