Stocks Dip Early as Yields Rise on Jobs Growth

Published as of: June 5, 2026, 9:17 a.m. ET

(Friday market open) U.S. jobs growth surged last month to 172,000, roughly doubling expectations, the Bureau of Labor Statistics (BLS) said, while unemployment remained at 4.3%. In addition, the government upwardly revised job gains for March and April, suggesting the labor market remains healthy despite war-fueled inflation and weak consumer sentiment. Stocks reacted poorly to the report in a "good news is bad news" scenario driven by Treasuries. The benchmark 10-year note yield jumped to 4.54%, fueled by concerns that the Federal Reserve might have to tame a hot economy.

Consensus was for May jobs growth of 85,000, down from a revised 179,000 in April. Unemployment was seen unchanged. "This was a massive upside surprise," said Cooper Howard, director of fixed income research and strategy at the Schwab Center for Financial Research (SCFR). "The headline number was good, but the revisions were also positive. It's likely the Fed remains on hold for the time being."

Major indexes roared back from early chip-driven weakness Thursday to end mostly up, putting the S&P 500 Index on pace for a possible 10th straight week of gains—something last accomplished in late 1985. Eight of 11 S&P 500 sectors rose Thursday, the kind of healthy breadth that tends to reinforce faith in rallies if it persists. Sectors like financials and healthcare found buyers as investors rotated out of tech. About 56% of S&P 500 stocks now trade above their 50-day moving average, still low considering the index trades near record highs. 

1. Jobs data deeper dive: Peeling back today's nonfarm payrolls report, service-oriented jobs "did most of the heavy lifting" last month, Howard said, led by leisure and hospitality with 70,000 new jobs. Healthcare and social assistance jobs also rose. Average hourly earnings climbed 0.3%, in line with consensus, while the average workweek was unchanged and labor force participation was stable. Jobs growth for March got revised to 214,000 from 185,000, and with combined changes, March and April jobs growth is a combined 93,000 higher than previously reported. Chances of a rate hike at some point this year rose slightly to around 57% soon after the report, from 50% before the data, according to the CME FedWatch Tool. Though it's just one data point, the May report and its two predecessors suggest economic resilience, perhaps meaning less need for the Fed to worry about hurting workers if it ultimately has to step in to fight rising prices. "I think it gives them more runway to wait to see what happens with inflation," Howard said.
    
2. Earnings growth expands: First-quarter earnings season has a bow and seal on it and FactSet is expected to update S&P 500 metrics later today after pegging earnings growth at almost 29% last week. While headlines mostly focus on the narrow earnings-fueled Wall Street rally that left most sectors in technology's dust, it's a slightly different impression one gets looking at earnings results. Stock leadership looks narrow, but earnings participation looks healthier, said Kasey McCurdy, chief portfolio strategist for Schwab Wealth Advisory, part of the SCFR team, in this week's WashingtonWise podcast. Tech is doing the heavy lifting when it comes to total earnings contribution, but many other sectors are producing solid, double-digit earnings growth for the first quarter. "And that's the distinction. The market feels narrow because we've seen these tech companies do really well recently, but the earnings breadth continues to improve," McCurdy said. "Now the risk is that forward expectations remain concentrated in just a few areas." FactSet estimates second quarter S&P 500 earnings growth at 21.6%, with double-digit growth seen for energy, tech, materials, and utilities.
    
3. At Fed, meet the new boss: Over the years, former Fed Chairman Jerome Powell's post-Federal Open Market Committee (FOMC) meeting press conferences arguably became "must see" TV for investors. That's even more so heading into the next meeting when new Chairman Kevin Warsh is expected to take the podium June 17. It's been more than eight years since anyone besides Powell handled these occasions, and the change in personalities might initially cause volatility as investors try to read the room. It certainly did in early 2018 when Powell replaced Janet Yellen and stocks fell sharply during Powell's first post-FOMC press briefing as investors heard a more hawkish-than-expected tone. It may take a few briefings for investors to get used to Warsh and how he chooses to discuss the economy and rates. In addition, history suggests that a new Fed chairman can affect market trends, though past isn't precedent. The S&P 500 Index skidded into a near-bear market in late 2018 as Powell and the Fed stayed hawkish when many investors felt the economy didn't need more rate hikes—one of those times when the market and Fed weren't in sync. They aren't now, either. The Fed still projects one rate cut this year and futures trading sees none. The Fed updates its projections at the June meeting.

• Lululemon (LULU) plunged 10% in early trading. Though quarterly results narrowly beat FactSet's consensus estimates, guidance disappointed as the company reduced its full-year outlook, citing headwinds.
   
• Chip stocks remained under pressure, extending the 2% loss suffered Thursday by the PHLX Semiconductor Index (SOX) as investors continued taking profits from the long rally and reacted to disappointing earnings from Broadcom (AVGO) earlier this week. Micron (MU) fell more than 4% and Arm Holdings (ARM) slid more than 5% early Friday. A few more sessions of weak chips and advancing healthcare and financial sector moves might add credence to the idea that a rotation is underway, but for now it's too early to say.
   
• Bitcoin futures (/BTC) dropped another 2.5% early Friday, putting pressure on crypto-related stocks including Strategy (MSTR), which fell 2.3%, and Coinbase Global (COIN), down 1.8%. Bitcoin will likely find support around $60,000, a level which roughly coincides with the cost of production for efficient miners and the 200-week moving average, said Jim Ferraioli, director of digital currencies research and strategy at SCFR.
   
• The S&P healthcare sector soared 3% overall yesterday, led by UnitedHealth (UNH) and Humana (HUM) after Bank of America upgraded UNH to buy. The analyst there saw improving costs trends and supportive near-term data points setting up a favorable earnings outlook for UNH.
   
• Eli Lilly (LLY) was another rallying healthcare name yesterday, climbing 4%. It added another 1.7% this morning, helped partly by last week's decision by CVS Health (CVS) to cover Lilly's new weight-loss pill and resume covering Lilly's Zepbound injectable.
   
• Apple (AAPL) climbed 0.5% and remains near record highs ahead of its Worldwide Developers Conference starting Monday. There's growing expectation that the company will unveil a wide number of advances in its AI program, including a revamp of Siri.
   
• Financial stocks enjoyed solid gains Thursday, led by Blackstone (BX), Ares Management (ARES), and Goldman Sachs (GS). Though there have been some recent jitters in the private credit market, there aren't any signs of widespread issues, and credit spreads remain low, which can encourage businesses to borrow. The KBW Nasdaq Bank Index (BKX) climbed 3.6%.

Bitcoin flows reverse: Investors sold a net $2.4 billion from bitcoin spot exchange-traded products (ETP) during May, the largest monthly net outflow since November 2025 and the third largest since spot ETPs launched in early 2024, according to Glassnode data. May marked a reversal after two months of net inflows. 

Though the tech-packed Nasdaq-100^® (NDX—blue line) remains well ahead of the S&P 500 Index (SPX—purple line) and the S&P 500 Equal Weight Index (SPXEW—candlesticks) over the last three months, there are signs of life below. The SPXEW has been steadily climbing over the last week or two, perhaps a sign that names with less market capitalization are starting to attract buyers.

June 8: Expected earnings from Campbell's (CPB).
June 9: May existing home sales and expected earnings from J.M. Smucker (SJM) and Casey's General Stores (CASY).
June 10: May CPI, May core CPI, and expected earnings from Chewy (CHWY) and Oracle (ORCL).
June 11: ECB interest rate decision, May PPI and core PPI, and expected earnings from Adobe (ADBE) and Lennar (LEN).
June 12: University of Michigan June preliminary consumer sentiment.