Wall Street surges, Treasury yields jump as upbeat jobs report eases economic fears

NEW YORK (Reuters) -Wall Street rebounded on Friday and U.S. Treasury yields jumped as a generally upbeat employment report and a bounce-back in Tesla shares helped put the indexes on track for weekly advances.

All three major U.S. stock indexes surged from the starting gate, while bitcoin jumped and crude prices settled at their highest level since mid-April.

“Stocks bounced back nicely today,” said Ryan Detrick, chief market strategist at Carson Group in Omaha. “It’s a recent theme we’ve been seeing; the day after a red day has been pretty strong. That’s another clue that the bulls are in charge.”

The U.S. economy added 139,000 jobs in May, topping analyst expectations, while the unemployment rate held firm at 4.2%, according to the Labor Department. The report also showed hotter-than-anticipated wage growth, rounding out a report that is unlikely to convince the U.S. Federal Reserve to cut its key policy rate in the near-term.

“The headline number was solid, but clearly there is some deterioration and slowing when you peel back the onion,” Detrick added. “The reality, though, is the labor market is still growing and the overall economy is still on fairly firm footing. That led to the relief rally to close out a solid week.”

The previous day, the very public spat between U.S. President Donald Trump and his top advisor billionaire Elon Musk had shaken the markets, sending shares of Musk-helmed Tesla tumbling, which helped drag the indexes decisively lower.

Tesla stock was last up 5.6%.

The falling-out between the erstwhile political allies revived concerns over Trump’s “Big Beautiful Bill” of tax and spending plans and its effect on the growing deficit.

Tariff negotiations between the U.S. and its trading partners remain fluid, with the European Union and India working toward ironing out deals, and further talks between Washington and Beijing promised after Trump’s phone call on Thursday with Chinese President Xi Jinping.

To that end, China has granted temporary export licenses to rare-earth suppliers of the top three U.S. automakers amid emerging supply chain snags due to Beijing’s export curbs on the materials. On the flip-side, the United States has suspended licenses for nuclear equipment suppliers to sell to Chinese power plants, according to people familiar with the matter.

The Dow Jones Industrial Average rose 435.70 points, or 1.03%, to 42,755.37, the S&P 500 rose 66.95 points, or 1.13%, to 6,006.21 and the Nasdaq Composite rose 269.36 points, or 1.40%, to 19,567.81.

European shares followed their U.S. counterparts higher after the jobs report, notching their second consecutive weekly gains, buoyed by upbeat U.S. employment data and waning worries over trade disputes.

MSCI’s gauge of stocks across the globe rose 5.85 points, or 0.66%, to 892.68.

The pan-European STOXX 600 index rose 0.32%, while Europe’s broad FTSEurofirst 300 index rose 7.10 points, or 0.32%.

Emerging market stocks fell 0.12 points, or 0.01%, to 1,182.56. MSCI’s broadest index of Asia-Pacific shares outside Japan closed lower by 0.1%,  to 622.65, while Japan’s Nikkei  rose 187.12 points, or 0.50%, to 37,741.61.

The dollar gained ground against major currencies in the wake of the better-than-expected employment data.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.52% to 99.19, with the euro down 0.42% at $1.1396.

Against the Japanese yen, the dollar strengthened 0.91% to144.83.

The report also prompted a rally in cryptocurrencies. Bitcoin gained 4.16% to $104,695.06. Ethereum rose 3.86% to $2,491.40.

U.S. Treasury yields also rode the wave of the upbeat jobs data.

The yield on benchmark U.S. 10-year notes rose 11.1 basis points to 4.504%, from 4.395% late on Thursday.

The 30-year bond yield  rose 7.5 basis points to 4.9593% from 4.884% late on Thursday.

The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 11.5 basis points to 4.039%, from 3.924% late on Thursday.

Crude prices registered their first weekly gain in three after Trump and Xi resumed trade talks, raising hopes of demand growth.

U.S. crude rose 1.91% to settle at $64.58 per barrel, while Brent settled at $66.47 per barrel, up 1.73% on the day.

Gold prices dipped in opposition to the strengthening greenback, as the jobs report clouded the outlook for rate cuts from the Federal Reserve. 

Spot gold fell 1.01% to $3,319.30 an ounce. U.S. gold futures fell 0.83% to $3,323.00 an ounce.

(Reporting by Stephen Culp; Additional reporting by Iain Withers in LondonEditing by Peter Graff and Nick Zieminski)