Trump: "US-China Talks in London on the 9th"… S&P tops 6,000 after four months [Global Market A/S]

The US nonfarm payroll report, a key economic indicator, greatly exceeded market expectations and sparked a relief rally in New York stocks. Major tech companies rose collectively, regaining a substantial part of the decline recorded after the launch of the Donald Trump administration.

On the 6th local time, at the New York Stock Exchange (NYSE), the S&P 500 index closed at 6,000.36, up 61.06 points or 1.03% from the previous session, marking the highest level since last February. Microsoft hit an all-time high, with the Nasdaq jumping 231.5 points or 1.2% to 19,529.95, and the Dow Jones Industrial Average finishing up 443.13 points or 1.05% at 42,762.87.

According to the May nonfarm employment report released by the US Bureau of Labor Statistics under the Department of Labor, 139,000 jobs were created in a month, exceeding the Wall Street consensus of 125,000 gathered by Dow Jones. This is in stark contrast to this week's disappointing ADP private employment report, which showed just 37,000 increase.

Healthcare and medical service jobs led the gains with 62,000 new positions, about 20,000 more than the 12-month average. Leisure and hospitality added 48,000, with the service sector leading job growth. Despite a loss of 22,000 federal government jobs due to staff cutbacks, gains in the private sector compensated for the reduction.

The unemployment rate remained stable at 4.2% for the third month, defying some market forecasts of a rise to 4.3%. Some analysts pointed out that shrinking labor force from decreased immigration contributed to the stable unemployment rate. Also, a total of 95,000 jobs were downwardly revised for March and April, signaling some cracks in the labor market.

These employment figures are close to the 'Goldilocks' scenario previously expected by J.P. Morgan. Michael Feroli, Chief US Economist, had forecast that if less than 100,000 jobs were added, the market would react negatively, but 140,000–170,000 would be an ideal result.

Stronger-than-expected jobs data cooled expectations of an imminent Fed rate cut. In rate futures markets, the probability of a September cut dropped from 90% to 70% on Thursday. The 10-year US Treasury yield briefly jumped 11.1bp (1bp=0.01%p) to 4.506%. Two-year yields were in the 4% range and 30-year yields neared 5%.

Seema Shah, Chief Strategist at Principal Global Investors, said, "There is little urgency for the Fed to cut rates" and added, "waiting until trade fog lifts will reduce the risk of a policy mistake." Adam Hetts, Portfolio Manager at Janus Henderson Investors, noted, "A solid employment report strengthens the slow-down economic narrative" and projected, "Tariff uncertainty will make the market more sensitive to follow-up indicators."

Despite robust jobs data, Trump continued to press the Fed. On Truth Social, he stated, "If Jerome Powell had lowered rates sooner, Treasury yields would be much lower," and argued, "There is essentially no inflation now, and this is causing massive harm." According to FedWatch from CME Group, about 97% of futures market participants expect no change in rates at the Federal Open Market Committee (FOMC) meeting on the 17th–18th this month.

● Searching for a Breakthrough in Tariff Talks… US and China to Meet Next Week in London

Meanwhile, progress in trade negotiations was signaled. According to Reuters, China granted temporary rare earth export permits to suppliers for the US big three automakers: GM, Ford, and Stellantis.

Previously, Trump announced that the US would hold a meeting in London on the 9th (local time), with Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and US Trade Representative Jamieson Greer participating with Chinese counterparts. This followed a phone call the previous day with Chinese President Xi Jinping.

However, open discord with Elon Musk was still ongoing. According to Reuters and others, the White House, through an anonymous source, said, "President Trump has no interest in speaking with Musk," and, "No phone call has been scheduled."

Trump also said in an interview with CNN, "I don't even think about Elon," and continued, "That guy has issues. I think the poor fellow has problems," criticizing Musk. Separately, NBC and others reported that the red Tesla Model S Trump personally purchased in March may be donated or sold off by the White House.

Musk has continued the rift, calling Trump's tax cut plan a "disgusting bill." Speaker of the House Mike Johnson, seeking to contain the situation, remarked, "I don't argue with Musk about how to build rockets, and I'd hope not to be argued with about how to write and pass bills," expressing frustration.

● Tesla Entangled in Political Debate… Concerns over Q2 Deliveries

Tesla rebounded 3.67% after a 14% plunge the previous day. Wedbush analyst Dan Ives commented, "Musk needs Trump and Trump needs Musk. If they can mend ties, it would bring big relief to Tesla shares."

Goldman Sachs, however, maintained a neutral view and lowered its target price from $295 to $285. Ongoing sales weakness in the US, Europe, and China has led to a sharp reduction in second-quarter delivery forecasts, from 410,000 to 365,000 units. Adam Jonas of Morgan Stanley said, "Emotions are running high. While I won’t change my long-term price target, I am bracing for short-term volatility."

For individual stocks, Trump’s drone development executive order prompted Joby Aviation and Archer Aviation to each surge 7–8%. The executive order aims to accelerate US drone manufacturing and development, as well as bolster projects linked to freight and logistics companies.

Robinhood Markets, an online securities trading platform in the US, jumped more than 3% after being cited as a likely S&P 500 addition. Circle Internet Financial, which succeeded in its IPO the previous day, soared again by 29.4% for a second day. Recursion Pharmaceuticals jumped more than 20% after jointly releasing the AI drug discovery model 'Boltz-2' as open source with MIT.

Kim Jonghak, jhkim@wowtv.co.kr