Blockbuster Payrolls Send S&P 500 North of 6,000: June 6, 2025

Traders are cheering this morning’s better-than-expected Friday Jobs report and are picking up stocks hand over fist, sending the S&P 500 above the monumental 6,000 level. May’s payroll performance was the second strongest of the year and is dampening concerns related to trade conflicts while quelling fears of an economic slowdown. But despite President Trump’s calls for the Fed to cut immediately, rates are jumping in bear flattening fashion as buoyant growth expectations and a lack of safe-haven demand drive yields north. The risk-on posture is further evidenced by weakening gold prices as well as the unwinding of volatility protection instruments. And while every major equity sector is gaining, investors are also boosting their exposures to the greenback, bitcoins, silver, energy commodities and forecast contracts. The offensive stance isn’t benefitting lumber, though, as pricier duration weighs on the outlooks for construction projects and real estate closings.   

Payrolls Post Strong Month

Hiring in the US economy decelerated slightly in May but still came in above every month of the year excluding April. The 139,000 jobs added exceeded the 130,000 expectation but slowed from the prior month’s 147,000. But the sector performance was narrow, with private education/health services and leisure/hospitality posting a combined 135,000 and financial activities was the only other category exceeding 10,000, sporting a gain of 13,000. Other services, information, utilities, transportation/warehousing, wholesale trade and construction increased positions at more modest degrees. Conversely, professional/business services, manufacturing, retail trade, mining/logging and government reduced headcounts by 18,000, 8,000, 6,500, 1,000 and 1,000.

Wage Pressures Intensify

Other aspects of the report also pointed to strength, which include subdued unemployment amidst wage pressures intensifying at paces that were well above expectations. Indeed, joblessness remained at 4.2%, as projected, while average hourly earnings rose 0.4% month over month (m/m) and 3.9% year over year (y/y), a tenth stronger than estimates on the former and two tenths on the latter. A negative development, however, happened to be a reduction in the labor force and the participation rate, which may have been caused by a combination of immigration restrictiveness as well as discouraged workers and former job seekers exiting the employment market.

President Trump Is No Fiscal Hawk

Today’s payroll beat follows some weaker data points from earlier in the week like ADP-jobs, ISM-manufacturing and services, factory orders, productivity, construction spending and unemployment claims. But Tuesday’s job openings print came in well above expectations and pointed to a rebound in labor vacancies. Taken together, the mixed developments signal the complexity at this stage in the economic cycle as corporates adapt to the uncertainty and shifting tides. Still, firms seem fine running the risk of sacrificing margins in the short-run in the case of a slowdown but appear increasingly unwilling to be caught offsides if economic conditions reaccelerate. For those reasons, businesses are signing capital expenditure checks and hiring workers in efforts to prepare for the possibility of momentous activity in incoming quarters. Furthermore, the federal government is poised to continue operating with sizeable deficits in the years to come, which is a tailwind for stocks and the economy right here right now. Indeed, the marketplace was nervous about austerity measures considering Tesla CEO Elon Musk was communicating significant declarations related to his intention of enacting sharp budget cuts in Washington. But I told CNBC this New Year’s Day, prior to the new administration taking office, that “President Trump is no fiscal hawk”.

International Roundup

Canada Jobs Also Beat

Canada employment gains also beat expectations, coming in at 8,800 in May despite estimates calling for a 15,000 loss. The progress was led by the full-time segment, as part-time positions were trimmed. The result follows April’s 7,400. The unemployment rate did edge a tenth of a percent up to 7%, however, as expected.

EU Retail Volumes Progress

Retail sales volumes, which are adjusted for inflation, edged up 0.1% m/m in the euro area during April. The result came in exactly as expected but slowed from March’s 0.4%. Driving the gain were increases in the food/drinks/tobacco and gasoline fuel categories which gained 0.5% and 1.3%. But non-food products excluding gas fell 0.3% throughout the period. On an annualized basis, the indicator expanded 2.3% y/y compared to the prior month’s 1.9%.