Stronger-than-Expected April Labor Report
May 11, 2026
The stock market entered last week with much uncertainty yet finished strong at record highs. Friday’s employment report reinforced the narrative of a steady labor market and resilient economy. April nonfarm payrolls surpassed expectations with 115,000 new jobs, nearly double investor expectations, while the unemployment rate remained at 4.3%.1 The S&P 500 Index was up 2.3% for the week, bringing year-to-date returns above 8%.2 Earnings continued to come in strong, with semiconductor and chip stocks maintaining their march higher.3 Intel extended its rally above its dot-com peak,4 an impressive return since the U.S. government investment in August 2025.
Fixed-income markets were steady, with the 10-year Treasury one basis point (bp) lower for the week at 4.36%.5 The 30-year Treasury did cross above the 5% threshold—its first time since last summer—but hit a wall of buyers and finished the week two bps lower at 4.94%.6 Corporate credit spreads were mixed and did not keep up with equity returns. Elevated high-yield new issuance pressured high-yield spreads, while investment-grade corporate spreads were firm.
In the week ahead, Kevin Warsh is expected to be confirmed as the next Federal Reserve (Fed) Chair, and current Fed Chair Powell is expected to stay as a governor. This dynamic suggests a reduced likelihood of interest rate cuts, with markets currently assigning a higher probability of a rate hike before year-end.7 Geopolitically, Presidents Trump and Xi are slated to meet at the U.S.-China Summit.
Key economic reports include existing home sales this morning, followed by the April Consumer Price Index (CPI) report on Tuesday, where core CPI is expected to rise 0.3% month-over-month, up from March.8 Focus then turns to the Producer Price Index (PPI) on Wednesday and retail sales on Thursday.9 While it seems investor attention has shifted away from the Middle East geopolitical concerns, Brent crude remains above $100 per barrel.10 This is another metric to watch in the week ahead as it continues to put upward pressure on interest rates.
Sources:
1-10Bloomberg
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