The major stock indices ended higher, with the NASDAQ leading the way. U.S. job data surpassed expectations, reporting an unemployment rate of 4.1% and a nonfarm payroll increase of 147,000, which was more than the anticipated 110,000. In the nonfarm payrolls, 147,000 jobs were added, with 74,000 in the private sector and 73,000 in government. The government jobs were mainly in state and local education, while healthcare added 39,000 jobs.

Sectors and Job Changes

Most sectors saw little to no changes, including wholesale trade, retail trade, and transportation. Manufacturing lost jobs again, but construction gained 15,000 jobs. Nearly half of the overall job increase came from government hiring. Key index statistics highlighted the following: – The Dow rose by 344.11 points or 0.77% to 44,828.53. – The S&P increased by 51.93 points or 0.83% to 6,279.35. – The NASDAQ gained 207.97 points or 1.02% to 20,601.10. For the week, the Dow increased by 2.30%, the S&P by 1.72%, the NASDAQ by 1.62%, and the Russell 2000 by 3.52%. Year-to-date, the Dow is up by 5.37%, the S&P by 6.76%, the NASDAQ by 6.68%, and the Russell 2000 by 0.84%. In summary, the trading week ended strongly, with all key U.S. indices showing gains. The NASDAQ performed the best, while the Russell 2000 is also recovering. The job data was better than expected, with both public and private sectors contributing. Notably, a significant portion of the job growth came from government hiring, particularly in education. This indicates that demand in the private sector remains uneven. Healthcare continues to grow steadily, adding 39,000 jobs, while major sectors like retail, wholesale, transportation, and information had little change. Manufacturing faced another decline, raising concerns that don’t align with the overall stability elsewhere. Construction, however, added 15,000 jobs. This sector often responds to interest rate changes and consumer confidence, suggesting that this job growth might be a reaction to anticipated shifts in rates.

Market Reactions and Future Outlook

The markets reacted positively—with substantial gains for the S&P, NASDAQ, and Dow—indicating confidence in growth trends and the belief that inflation may not rise again soon. All indices are now showing strong yearly performance, demonstrating renewed buying momentum. Historical data suggests when the S&P and NASDAQ show over 5% gains midway through the year, further upside in large-cap stocks is likely. Weekly performance showed broad gains, especially in the Russell 2000, which climbed over 3%, reflecting renewed interest in small-cap stocks. This market response signals confidence in continued growth without severe setbacks. The unemployment rate of 4.1% is slightly higher than before, but it coincides with strong job additions, indicating more people are entering the workforce—hardly a sign of instability. Looking ahead, attention should focus on areas with growing discrepancies. The ongoing weakness in manufacturing is a concern, especially compared to gains in services. Traders may want to approach industrial stocks carefully, considering stronger healthcare against weaker manufacturing. As core indices remain above key technical moving averages, there’s room for momentum strategies. However, the increase in range-bound volatility, especially in shorter-term contracts, adds complexity. Participants in volatility must be alert to day-to-day changes while paying close attention to macroeconomic calendars and upcoming earnings seasons. Cash volumes were light to moderate heading into Friday’s close, which might imply that some funds are still waiting to invest significantly. Tech strength continues to look favorable. With the NASDAQ outperforming, strategies involving asymmetric call structures and calendar spreads toward late Q3 expiry are still relevant. Future shifts in the market may depend more on inflation updates or comments from central bank officials rather than employment numbers, as wage growth has remained flat, and most new jobs are in education-related sectors. Expect continued strong correlations between bond yields and cyclical sector performance. Fixed income markets did not push 10-year yields higher despite positive jobs data, indicating that traders do not anticipate immediate rate hikes. There may be a resurgence of steepeners and duration bets in fixed income, influencing short-term equity derivatives. As the NASDAQ and S&P charts indicate upward trends, straddles and calendar call diagonals will require extra attention in case of any pullbacks. With established weekly gains, we don’t expect complete retracements due to minor macroeconomic events. Last week’s options trading showed decreased put activity and a flatter skew. If this pattern continues and the VIX remains stable, we’ll prefer defined-risk bullish strategies, especially those with breakeven points below current levels while still maintaining significant potential. Keep an eye on sector-specific ETFs for further insights, particularly in regions seeing construction growth. Deal flow in transportation and services has been slow, so adjustments to pair strategies may be necessary. In this environment, gains are unlikely to be pursued aggressively without some corrective phases. However, given that half of the week’s job additions came from government sectors and inflation remains subdued, the current macroeconomic outlook remains supportive—for now. Create your live VT Markets account and start trading now.

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