The Dow Jones Industrial Average surged Friday for its best day since January as traders cheered a strong jobs report and the passage of a debt ceiling bill that averts a U.S. default.
The 30-stock Dow jumped 701.19 points, or 2.12%, to end at 33,762.76. The S&P 500 climbed 1.45% to close at 4,282.37. The Nasdaq Composite advanced 1.07% to 13,240.77, reaching its highest level since April 2022 during the session.
With Friday's gains, the S&P 500 and Nasdaq finished the holiday-shortened trading week about 1.8% and 2% higher, respectively. The Dow's Friday advance pushed it into positive territory for the week, finishing up 2%. The Nasdaq notched its sixth straight week higher, a streak length not seen for the technology-heavy index since 2020.
Nonfarm payrolls grew much more than expected in May, rising 339,000. Economists polled by Dow Jones expected a relatively modest 190,000 increase. It marked the 29th straight month of positive job growth.
Recently, strong employment data had been pressuring stocks on the notion it would keep the Federal Reserve raising interest rates. But Friday's data also showed average hourly earnings rose less than economists expected year over year, while the unemployment rate was higher than anticipated.
Both data points have given investors hope that the Fed could pause its interest rate hike campaign at the policy meeting later this month, according to Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.
"The so-called Goldilocks has entered the house," Sandven said. "Clearly, on the bullish side, there are signs that inflation is starting to wane, speculation that the Fed is going to move into pause mode, increasing the likelihood of a soft landing."
Easing concerns around the U.S. debt ceiling also helped sentiment. The Senate passed a bill to raise the debt ceiling late Thursday night, sending the bill to President Joe Biden's desk. That comes after the House passed the Fiscal Responsibility Act on Wednesday, just days before the June 5 deadline set by U.S. Treasury Secretary Janet Yellen.
Lululemon shares popped more than 11% on strong results and a guidance boost, while MongoDB surged 28% on a blowout forecast.
The CBOE Volatility Index — also known as Wall Street's "fear gauge" as it approximates expectations for how much the S&P 500 will rise and fall in coming weeks — closed Friday at 14.60, its lowest since Feb. 19, 2020, shortly before the Covid pandemic closed the economy.
— Scott Schnipper, Christopher Hayes
The Russell 2000 index of small-cap stocks jumped 3.56% on Friday, the best one-day rally since Nov. 10, 2022, and rising above its 200-day moving average for the first time since March 8, just before Silicon Valley Bank blew up.
The smallcap iShares Russell 2000 ETF outperformed both the largecap iShares Russell 1000 ETF and the SPDR S&P 500 ETF Trust by the widest margin since Nov. 1, 2021.
Year to date, the Russell has now gained 3.96%, far behind the S&P 500's advance of 11.5%.
But maybe the winds are shifting. In the week just ended, the Russell rose 3.3% while the S&P 500 added 1.8%.
— Scott Schnipper, Gina Francolla, Nick Wells
Stocks finished Friday up, closing out a winning holiday-shortened trading week.
The Dow finished up about 2.1% higher and 2% up on the week. The S&P 500 added roughly 1.5% in Friday's session, ending the week up 1.8%.
The Nasdaq Composite rose around 1.1% Friday. With a 2% weekly gain, the Nasdaq notched its sixth straight week of wins. That's the longest weekly win streak for the technology-heavy index since 2020.
— Alex Harring
Amid another winning week for the market, three cruise stocks made the list of top outperformers.
Norwegian Cruise Line and Royal Caribbean gained 9.3% and 7.8% week to date, respectively, making them fifth- and seventh-highest earners in the S&P 500 this week as of Friday morning. Carnival rose 6.7% this week.
Check out some of this week's other big gainers here.
— Hakyung Kim
Investors were focusing mainly on the wage data, according to Ross Bramwell, principal at Homrich Berg, because it could prompt the Fed to pause its interest rate hiking campaign at the policy meeting scheduled for later this month.
"Markets are kind of cheering that, 'Hey, we've been able to get to, hopefully, a pause level, and we're not in a recession,'" Bramwell said. "This really just kind of gives credence to those who are wanting to believe in the soft-landing scenario. This is kind of a gift that kind of fell in the Fed's lap."
— Alex Harring
Morgan Stanley upgraded shares of The Trade Desk and added the firm to its "best-in-class" list.
"As the leading independent demand-side platform (DSP), TTD is well positioned to benefit from both trends, as advertisers 1) shift dollars from traditional linear TV to streaming, and 2) leverage retailers' customer data to run more effective/measurable ad campaigns," said analyst Matthew Cost.
The stock has added 63% from the start of 2023 thanks to a rebound in ad sales.
CNBC Pro subscribers can read the full story here.
— Brian Evans
Bank of America has identified a "Magnificent Seven" group of stocks that have powered most of the gains this year for the S&P 500.
The group has accounted for almost 90% of the large-cap index's 10% gain in 2023 and includes familiar names such as Nvidia and Microsoft.
Michael Hartnett, the firm's chief investment strategist, said a good contrarian strategy for June would be to bet against the group after it has seen such outsized gains. CNBC Pro subscribers can read more here.
—Jeff Cox
The three main industries were still on pace to post large gains in Friday's session as the final trading hour of the trading day and holiday-shortened week kicked off.
The Dow was up more than 700 points, or 2.13%. It's on pace to see its best day since November, 30, 2022, when the Dow finished up 2.18%. Friday's rally pulled the blue-chip average into positive territory on the week, last up 2.08%.
Elsewhere, the S&P 500 advanced 1.55% on Friday. It's up 1.92% week to date.
And the Nasdaq Composite added a relatively modest 1.09% on Friday, but was neck and neck with the Dow on weekly gains at 2.06%. The technology-heavy index is on pace to post its sixth straight week of wins, a streak length not seen for the Nasdaq since 2020.
— Alex Harring
The U.S. is not out of the fiscal doghouse with Fitch, as the ratings firm said government debt is still on a watch for a possible downgrade despite the debt ceiling deal.
"Reaching an agreement despite heated political partisanship while reducing fiscal deficits modestly over the next two years are positive considerations," Fitch said in a release. "However, Fitch believes that repeated political standoffs around the debt-limit and last-minute suspensions before the x-date (when the Treasury's cash position and extraordinary measures are exhausted) lowers confidence in governance on fiscal and debt matters."
The firm cited a "steady deterioration in governance over the last 15 years" as reasons for its pessimistic outlook and said it will "resolve" the credit watch status in the third quarter of 2023.
Moody's on Thursday said it is not considering the U.S. for a downgrade.
—Jeff Cox
Salesforce and Verizon were the only two Dow members trading down on Friday, restricting gains on the closely followed index's rally.
Verizon was among a group of telecommunication stocks trading lower after Bloomberg reported that Amazon was considering launching a mobile service for Prime members. Shares were 3.6% lower Friday afternoon.
Salesforce slipped 0.7%, continuing to struggle after investors grew nervous about commentary from company management when reporting earnings Wednesday. The statements, which centered on concerns around potential pressure as customers pull back from big consulting deals, pulled attention from a better-than-expected quarterly report and guidance raise. Shares have slipped 1.8% week to date.
But those slides were diluted by gains from the other 28 members. 3M and Caterpillar led the blue-chip index up with gains of around 8.5% and 7.8%, respectively. The Dow as a whole was up more than 700 points at session highs.
— Alex Harring
Broadcom will continue to benefit from investor excitement over artificial intelligence, according to Bank of America.
The firm reiterated a buy rating on the chipmaker on Thursday, albeit with a renewed price target. BofA thinks an undervalued AI segment could add to upside thanks to the company's exposure to the sector.
"In a bull case scenario where AVGO can grow AI exposure to ~25% of sales (and hold growth rates of non-AI assets at previously mentioned levels), we see incremental $2bn/$3 upside to our sales/EPS estimates," Analyst Vivek Arya said.
Broadcom stock rose more than 2% on Friday and has added more than 41% from the start of the year.
CNBC Pro subscribers can read the full story here.
— Brian Evans
Friday's gain put the S&P 500 around breakeven going back to March 2022, when the Federal Reserve embarked on its current interest rate hiking cycle.
Bespoke Investment Group first pointed this out.
It has been a tumultuous time for investors, as those rate increases pushed the broader market index into a bear market. However, Wall Street may be seeing some light at the end of the tunnel.
— Fred Imbert
The major indexes were trading near session highs with just under 3 hours left in the trading day as investors kept the Friday advance going.
The Dow rose 640 points, near its high of 666 points up.
Similarly, both the S&P 500 and Nasdaq were less than one-tenth of a percentage point off session highs. The S&P 500 was last up 1.42%, just shy of its highest point in the session of 1.5%. The Nasdaq Composite added 1.06%, slightly off its highest session gain of 1.16%.
— Alex Harring
Every sector of the S&P 500 was trading higher on Friday, powering a broad rally for the index.
Materials led the sector up with a 3.3% advance, followed by industrials and energy, which both gained more than 2.5%.
Communication services and information technology were the worst performers of the week but were still both 0.5% higher. By comparison, the broad index as a whole was up 1.4%.
Consumer staples was the only sector not on pace to notably finish above the weekly flatline as it was up less than 0.1% week to date. Dollar General has pulled the sector down with a nearly 20% week-to-date loss, followed by Dollar Tree at 6% down and Target at 5.2% lower.
Utilities, which has performed the second worse this week, is on pace to finish 1% higher. Meanwhile, consumer discretionary, the best week-to-date sector, is slated for a 3.5% gain.
— Alex Harring
These are some of the stocks making the most significant moves during midday trading:
Lululemon — The athleisure apparel company rallied 12% on strong fiscal first-quarter earnings results. The company posted a top and bottom line beat and a 24% year-over-year increase in sales. Lululemon also raised its guidance for the full year.
SentinelOne — The cybersecurity stock sank more than 36% after SentinelOne's revenue fell short of expectations. SentinelOne posted revenue of $133.4 million, below a FactSet forecast of $136.6 million.
MongoDB — Shares of the data developer rocketed 27% after the company forecast strong fiscal first-quarter earnings and boosted its full-year guidance.
Read the full list here.
— Samantha Subin
Some cloud stocks got a lift on Friday following a strong quarterly report from companies like MongoDB and Zscaler.
Shares of Datadog and Snowflake each rose more than 5.3%, while Atlassian gained about 4%. The Global X Cloud Computing ETF added 1.9% and the First Trust Cloud Computing ETF edged 2.2% higher.
Some cloud names moved lower during Friday's session. Salesforce lost 1%, while PagerDuty shed 17% on weak guidance.
— Samantha Subin
The U.S. payrolls report for May blew past expectations, supported by strong jobs gains in the professional and business services sector — as well as a jump in government employment.
Professional and business services led job creation for the month with 64,000 new hires, following an increase of similar size in April. Government added 56,000 jobs last month, higher than the average monthly gain of 42,000 over the prior 12 months.
Job gains were broad-based last month with health care contributing 52,000 and leisure and hospitality adding 48,000.
— Yun Li
Shares of construction equipment maker Caterpillar are up 5.8% Friday, putting it on pace for its best day since Mar. 1.
Caterpillar shares are having biggest positive impact on the Dow Friday, followed by Goldman Sachs and Home Depot, which are up 2.4% and 1.8%, respectively.
— Hakyung Kim, Gina Francolla
JPMorgan downgraded Xcel Energy stock on Friday over lower electricity costs in Minnesota from state regulators.
"We expect this outcome and heightened market attention on the CO electric rate case to weigh on XEL for now mirroring reactions over the past nine months to varying levels of surprise in the rate case arena," analyst Jeremy Tonet said.
Xcel stock was down 1.3% on Friday. Shares have dropped more than 11% this year.
CNBC Pro subscribers can read the full story here.
— Brian Evans
The three major indexes continued rallying in late morning trading.
The Dow jumped more than 500 points, trading up around 1.7%. The S&P 500 added 1.4%, while the Nasdaq Composite advanced 1%.
— Alex Harring