Stocks surged higher in the closing days of a holiday-shortened trading week, ignited by a political resolution on raising the debt ceiling and a strong employment report. The Dow Jones Industrial Average rose 2.02%, while the Standard & Poor’s 500 advanced 1.83%. The Nasdaq Composite index gained 2.04% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slipped 0.52%.1,2,3
The weight of uncertainty over negotiations to raise the federal debt ceiling was lifted last week by the news of an agreement between President Biden and House Speaker McCarthy and its subsequent passage in Congress. After a modest gain on Thursday following the House vote, stocks rallied on Friday, responding to the Senate passage of the debt ceiling bill, which eliminated a significant overhang to the market. A robust federal employment report also contributed to the Friday rally. The report exceeded market expectations in the growth of new jobs while reflecting a deceleration in wage growth.
Last week’s employment data showed that the labor market remains stout after over a year of sharp interest rate hikes. Job openings in April increased to more than 10 million, reversing three straight months of declines, while private sector employment increased by 278,000 jobs in May, according to a survey by Automated Data Processing (ADP), a significant payroll processor.4,5
In line with these strong numbers, the Department of Labor reported 339,000 new jobs were added in May. That came above the consensus estimate of 190,000 and marked the 29th consecutive month of positive growth.6
1.The Wall Street Journal, June 2, 2023, 2. The Wall Street Journal, June 2, 2023, 3. The Wall Street Journal, June 2, 2023, 4. The Wall Street Journal, May 31, 2023, 5. CNBC, June 1, 2023, 6. CNBC, June 2, 2023