Today's War Room Trading Recap

Market Recap – May 2, 2025

Markets closed mixed on Friday following a volatile session driven by the April nonfarm payrolls report, which showed the U.S. economy added 175,000 jobs, falling short of consensus expectations near 240,000. The unemployment rate ticked up to 3.9% from 3.8%, and wage growth cooled slightly with average hourly earnings rising just 0.2% month-over-month versus the expected 0.3%.

Key Takeaways:

• Stocks rallied at the open as traders interpreted the softer labor data as a sign the Federal Reserve may be done hiking interest rates and could potentially pivot sooner than expected.

• However, gains faded intraday, particularly in the financial and energy sectors, as bond yields declined and oil prices dropped on recessionary fears.

• The Nasdaq outperformed, lifted by mega-cap tech stocks like Apple and Microsoft, as investors rotated into perceived defensive growth.

• The S&P 500 closed flat, while the Dow Jones Industrial Average slipped modestly, pressured by weakness in banks and industrials.

Sector Highlights:

• Technology led, driven by a rally in semiconductors and AI-related names.

• Financials and energy were the weakest performers as falling yields and commodity prices pressured those groups.

• Utilities and consumer staples saw inflows as traders hedged against a potentially slowing economy.

Market Sentiment:

Today’s jobs report confirmed that the labor market is cooling without collapsing, reinforcing the narrative of a soft landing. Traders priced in higher odds of a rate cut by the September FOMC meeting, pushing Treasury yields lower and supporting risk assets early in the session. However, the market remains cautious, with many participants watching next week’s CPI and PPI data for confirmation of easing inflation.