The jobs market rebounded from a sluggish February to add 196,000 jobs in March. But wages rose only 0.1%, leading to speculation that the Federal Reserve would refrain from any more rate increases this cycle.
The unemployment rate was unchanged at 3.8%.
The report adds to fairly upbeat construction spending and factory numbers that led Wall Street banks to boost their growth estimates for the first quarter.
“A mixed but overall very solid jobs report. The healthy bounce back in hiring last month should help to quell recession fears,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
“Still, weaker wage growth suggests the Fed’s December rate hike may have been its last in the current cycle.”
The Federal Reserve last month suspended its three-year campaign to tighten monetary policy, increasing market expectations of an interest rate cut.
However, the latest job numbers gave traders little reason to reprice expectations for a rate cut in 2020.
The pressure on wages has eased, dampening inflation fears and indicating that there’s still some slack in the jobs market.
Also, the prospect of a trade deal with China and an end to the tariff wars added to the ebullient mood on Wall Street.
The markets were also helped by President Donald Trump’s comments that the U.S. and China were close to a trade deal that could be announced within four weeks, potentially easing concerns about a months-long tariff war that has clouded global growth.
Trade hopes and a dovish Fed have helped push the S&P 500 to its highest since Oct. 9, putting the index 1.8% away from an all-time high of 2,940.91 points.
Bank of America Merrill Lynch said the index could scale new highs above 3,000 in the second quarter, fueled by gains in bank and oil stocks, before peaking out.
At 9:49 a.m. ET the Dow Jones Industrial Average was up 58.27 points, or 0.22%, at 26,442.90, the S&P 500 was up 7.53 points, or 0.26%, at 2,886.92 and the Nasdaq Composite was up 26.44 points, or 0.34%, at 7,918.22.
The administration’s tax cuts and regulatory reform have created the conditions for moderate growth through 2020. This is very bad news for Democrats who had been hoping for a recession by the end of this year. That prospect now appears to be off the table.
Democrats will point to the slow wage growth as evidence that economic benefits are spread unevenly with working people getting the short end. But given that wages grew by a healthy 0.4% in February, these monthly fluctuations really don’t mean very much.