A surprisingly weak report on hiring in the United States rippled through financial markets today, with the data deflating investors’ concerns that the economy could overheat as it recovers from the coronavirus pandemic.
Employers added 266,000 workers last month, the government said, far below economists’ expectations of an increase of nearly 1 million new positions.
The report also revised March’s job gains lower.
As the economy has rebounded from last year’s shutdowns, investors have grown worried this year that the Federal Reserve might be prompted to remove some of its emergency assistance for the economy — by raising interest rates or cutting back on its bond-buying program — sooner than anticipated.
One reason the Fed would have to do that, some economists have argued, is that the rapid growth could trigger inflation that the central bank can’t tolerate.
But today’s data bolstered the counterargument: The recovery is far from complete.
“This is a highly uncertain environment that we’re in,” Neel Kashkari, the president of the Federal Reserve Bank of Minneapolis, said in a Bloomberg Television interview shortly after the report was released. “We have a long way to go, and let’s not prematurely declare victory.”
Yields on government bonds, a primary barometer of investors’ outlook for economic growth and monetary policy, tumbled to as low as 1.46 percent in the minutes after the report before recovering to earlier levels.
An index of the U.S. dollar dropped to its lowest level since February.
Investors in high-flying sectors of the stock market have been particularly sensitive to Treasury yields this year — higher yields make risky investments less appealing.
But on Friday, the sudden drop in yields lifted technology stocks like Microsoft, Apple and Tesla.
The S&P 500 index rose 0.7 percent, to a record. In Europe, stocks added to their earlier gains, with the Stoxx Europe 600 climbing 0.9 percent.
Some analysts noted that there was good news in toiday’s report.
It did show hiring continues, after all, even if it is at a slower pace than Wall Street had anticipated.
“While less good for the economy than a booming labor market, a ‘Goldilocks’ jobs recovery that is neither too hot nor too cold, could continue to support equity markets,” Mike Bell, a strategist at JPMorgan Asset Management, wrote in a note to clients.