US stocks notched a weekly gain after a strong jobs report alleviated recession fears but cleared the path for the Federal Reserve to keep raising interest rates to fight inflation. 

The S&P 500 closed flat on Friday after struggling for direction throughout the session. The Nasdaq 100 rose, scoring its longest winning streak this year. Treasuries slumped, with the two- and 10-year yield curve remaining inverted for the fourth straight day. The Bloomberg Commodity Index suffered its longest streak of weekly losses since March 2020. 

The jobs report reaffirmed the strength of the economy, fueling the Fed to stay aggressive to combat inflation. The moderation in the number of jobs, however, was seen as a positive sign as the central bank seeks to engineer a soft landing. A handful of Fed officials, including two of its most hawkish policy makers, said this week that they supported raising interest rates by 75 basis points for a second month in a row. Recent data also signaled to investors that worries about a recession were overblown, a claim echoed by Fed officials this week.

“The economy is slowing but the Fed wants it to slow. So I think all the recession talk is a little bit premature right now,” Priya Misra, global head of rates strategy at TD Securities, said on Bloomberg TV. “Inflation is still a problem and the Fed has changed their reaction function, I would argue. They are emphasizing – overemphasizing – headline inflation over the labor market right now.”

Federal Reserve Bank of New York President John Williams reiterated the bank’s inflation target on Friday. 

Here’s what else Wall Street is saying about US payrolls:

“We’re dealing with a central bank that actually wants concrete evidence of seeing price increases slow, and we didn’t get that today.” - Giorgio Caputo, senior fund manager at JO Hambro Capital Management.

“Right now, the labor market is not the problem child, it is being the well-behaved kid, so the Fed thinks they can kind of ignore the labor market right now and focus all on inflation.” - Victoria Greene, chief investment officer and founding partner at G Squared Private Wealth.

“Today’s job number should soothe fears of an imminent recession, but it does nothing to relieve fears of considerable further Fed tightening.” - Seema Shah, chief global strategist at Principal Global Investors.

“There is a feeling of Wile E. Coyote running over the cliff, the economy is slowing, Fed hikes will almost certainly lead to a hard landing, but with employment remaining this strong, and next week’s CPI likely to stay high, the risk that the Fed will hike higher and further than they should increases.” - Steve Chiavarone, senior portfolio manager at Federated Hermes

Earlier, shockwaves spread through the markets after Japan’s former Prime Minister Shinzo Abe was assassinated. 

Bitcoin rose and is trading around US$21,000. 

Some of the main moves in markets:

Stocks

• The S&P 500 was little changed as of 4:02 p.m. New York time
• The Nasdaq 100 rose 0.1 per cent
• The Dow Jones Industrial Average fell 0.1 per cent
• The MSCI World index rose 1.6 per cent

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.2 per cent to US$1.0181
• The British pound was little changed at US$1.2032
• The Japanese yen was little changed at 136.08 per dollar

Bonds

• The yield on 10-year Treasuries advanced nine basis points to 3.08 per cent
• Germany’s 10-year yield advanced three basis points to 1.34 per cent
• Britain’s 10-year yield advanced 11 basis points to 2.23 per cent

Commodities

• West Texas Intermediate crude rose 1.9 per cent to US$104.68 a barrel
• Gold futures were little changed