Wall Street is overcoming default fears and aims to finish the trading week in the green. The benefactors of positive market sentiment are US legislators who have protected the government from defaulting on its debt and Fed’s policymakers who dropped a hint about a pause in monetary tightening. The crucial event today is the US nonfarm payrolls. Though the labor market has sent mixed signals recently, they could benefit risky assets.

The benchmark stock indices traded higher yesterday and hit multi-month highs.
The Doe Jones added 154 points or 0.47%. The Nasdaq logged the best performance and closed 1.28% up. The S&P 500 grew by 0.99% intraday to close at 4,221.
The major stock indices traded in confidence in the New York pre-market. The S&P 500 is expected to trade in the corridor between 4,200 and 4,000.
On Thursday, the Nasdaq and the S&P 500 jumped to the highest levels in nine months. The catalyst for optimism of risky assets was the approval of the US debt ceiling deal.
The data on the labor market was mixed. The number of initial unemployment claims grew marginally last week, but employment in the US private sector increased in May much stronger than expected. All in all, this indicates a still tense labor market.
ADP payroll processor reported that wage growth eased last month. The unit labor cost rebounded to 4.2% in the first quarter.
Easing wage growth aroused the hope that the US Fed could hit a pause bottom in June. Nominee to the Fed’s Vice Chair Philip Jefferson said on Wednesday that skipping a rate hike in June would allow the Federal Reserve to evaluate more economic data before making the decision on further tightening.
According to the FedWatch tool, the market now foresees about a 75% chance that the Fed will put interest rates on hold at its upcoming meeting, although there is about a 50% chance of a 25 basis point rate hike at one of the next Fed meetings.
The dovish outlook caused a rally in bonds. Yields on 10-year bonds were close to a weekly loss of about 20 basis points, the biggest weekly drop since mid-March.
In this context, the Nasdaq and the S&P 500 closed at the strongest levels since August 2022. The S&P 500 owes its rally to Nvidia shares which leapt by 5.1%.
The Dow Jones’ growth was capped by Salesforce shares which dropped by 4.7%. The company reported the lowest revenue growth in the last 13 years.
Shares of Goldman Sachs tumbled by 2.3% after the lender announced plans for further staff cuts as the difficult economic environment hampers deals.
Meta shares rose by 2.98%, helping lift the Nasdaq after the introduction of the next-generation mixed reality headset.
Already on Friday, futures for indices added about 0.5% intraday. Yesterday's sentiment was supported by signs that the Fed will skip a rate hike at its next meeting and the approval of a debt ceiling law.
The US Senate has passed a bipartisan bill, backed by President Joe Biden, that raises the 31.4 trillion-dollar federal debt ceiling, preventing what could be the first-ever default. This issue could be resolved sooner which eliminated some of the potential risks and reassured investors. In this context, the Wall Street Fear Index hit its lowest level since November 2021 on early Friday.
Markets are now focused on US employment data, the most important macro report of the week, and both optimists and pessimists can find an outlet in it.
The jobless rate in the US rose to 3.7% in May, the highest level since October 2022, surpassing the consensus of 3.5%. Despite the increase, the unemployment rate remains at historic lows, proving resilience on the labor market. Besides, the report showed that average hourly earnings of employees in the public and private sector grew less than expected in May. The figure was 0.3%, a downtick from the expected 0.4% growth. Wages rose by 0.4% in April. Wages have increased by 4.3% in the last 12 months in line with expectations.
The US economy created 339,000 jobs in May, the biggest growth in the last 4 months and much higher than the forecast of 180,000 jobs. The number of jobs was 93 thousand more than estimated.

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00:00 INTRO
00:35 S&P500
01:11 QUOTES
05:46 US UNEMPLOYMENT RAY (MAY)
06:16 AVERAGE HOURLY EARNINGS, M/M (MAY)
00:00 US NONFARM PAYROLLS (MAY)
07:23 USDX
09:09 USD | CAD
09:31 OIL
10:10 BTC | USD