Wall Street Leaps, Nearly Escapes Bear 06/02 16:03

   Stocks rushed higher Friday after a strong report on the U.S. job market 
suggested a recession may not be as close as Wall Street had feared.

   NEW YORK (AP) -- Stocks rushed higher Friday after a strong report on the 
U.S. job market suggested a recession may not be as close as Wall Street had 
feared.

   The S&P 500 leaped 1.5% for the latest surge in a rally that's vaulted it 
nearly 20% since mid-October. That put Wall Street's main measure of health on 
the edge of entering what's called a "bull market" despite a long list of 
challenges.

   The Dow Jones Industrial Average rallied 701 points, or 2.1%, while the 
Nasdaq composite gained 1.1%.

   They got a boost after a report showed employers unexpectedly accelerated 
their hiring last month. It's the latest signal that the job market remains 
remarkably solid despite much higher interest rates, and it offers a hefty 
pillar of support for an economy that's begun to slow.

   Areas of the market that do best when the economy is healthy led a 
widespread rally, including stocks of industrial companies, energy producers 
and banks. Exxon Mobil rose 2.3% as prices for crude oil climbed on hopes that 
a resilient economy would burn more fuel.

   Perhaps more importantly for markets, the Labor Department's monthly jobs 
report also showed a slowdown in increases for workers' pay even as hiring 
strengthened.

   While that may discourage workers trying to keep up with prices at the 
register, investors believe slower wage gains will mean less upward pressure on 
inflation across the economy.

   That in turn could allow the Federal Reserve to take it easier on its hikes 
to interest rates meant to lower inflation. High rates do that by slowing the 
economy and hurting investment prices, and they've already caused pain for the 
banking and manufacturing industries.

   The unemployment rate also rose by more than expected last month, moving up 
to 3.7% from a five-decade low. That implies a bit more slack in the job market 
and seems to conflict with the gangbusters hiring numbers, whose data comes 
from a separate survey.

   "The reality is probably somewhere in between," said Brian Jacobsen, chief 
economist at Annex Wealth Management.

   "One thing that is striking is that if you compare aggregate payrolls today 
to the pre-COVID trend, we still have more than a four million job hole to 
fill-in," he said. "COVID led to strange times, a strange recovery and an even 
stranger slowdown."

   Following the report, traders were largely expecting the Fed to hold 
interest rates steady at its next meeting in two weeks. If it does, that would 
be the first time it hasn't hiked rates in more than a year.

   A pause on rate hikes would offer some breathing room for an economy that's 
already seen manufacturing contract sharply for months. Higher rates have also 
hurt many smaller and mid-sized banks, in part because customers have pulled 
deposits in search of higher interest at money-market funds.

   Several high-profile bank failures since March have shaken the market, 
leading Wall Street to hunt for other possible weak links. Several under the 
heaviest scrutiny rallied following the jobs report. PacWest Bancorp leaped 
14.1%, for example, to trim its loss for the year to 66.6%.

   But Fed officials have also warned recently that a pause on rate hikes in 
June wouldn't necessarily mean the end to hikes.

   Traders are increasingly expecting the Fed to follow up a June pause with a 
July hike to interest rates, according to data from CME Group. That helped push 
Treasury yields higher.

   The yield on the 10-year Treasury climbed to 3.69% from 3.60% late Thursday. 
It helps set rates for mortgages and other important loans.

   The two-year Treasury yield, which moves more on expectations for Fed 
action, jumped to 4.50% from 4.34%.

   Also helping to support Wall Street was the Senate giving final approval 
late Thursday to a deal that will allow the U.S. government to avoid a 
potentially disastrous default on its debt. The move was widely expected by 
investors, and the deal moves next to President Joe Biden for his signature.

   Lululemon Athletica jumped 11.3% after it reported stronger profit for the 
latest quarter than expected, crediting accelerating sales trends in China and 
other factors. It also raised its forecast for results over the full year.

   MongoDB soared 28% after the database company reported bigger profit than 
expected. It said it's confident it will benefit from the wave of enthusiasm 
around artificial intelligence that's swept the business world.

   A frenzy around AI has helped the S&P 500 climb to its highest levels since 
August. Nvidia, whose chips are helping to power the move into AI, has soared 
169% this year, for example.

   Outsized gains for Nvidia and a small group of other stocks have been the 
main reason the S&P 500 has gotten so close to escaping its bear market, which 
saw a drop of 25.4% in nine months from early January 2022 into October.

   Just a couple handfuls of stocks have driven the bulk of the gains for the 
S&P 500, and critics say that means it may not be as strong as appears. Even 
though the S&P 500 is up 11.5% for the year so far, nearly half the stocks in 
the index have lost ground amid worries about falling profits, still-high 
inflation and much higher interest rates.

   All told, the S&P 500 rose 61.35 Friday to 4,282.37. The Dow climbed 701.19 
to 33,762.76, and the Nasdaq gained 139.78 to 13,240.77.