Markets jump higher after softer-than-expected jobs report fuels hopes of an earlier rate cut

US stocks soared higher Friday morning after new data showed that US job growth slowed considerably last month.

US stocks soared Friday after new data showed that US job growth slowed considerably last month. After surging by more than 500 points after the opening bell, the blue-chip Dow was higher in mid-morning trading by 423 points, or 1.1%; the S&P 500 was up 1.1% and the tech-heavy Nasdaq gained 1.9%. The economy added just 175,000 new jobs in April, according to Bureau of Labor Statistics data, far below economists’ expectations for 235,000 jobs and the 315,000 jobs added in March. The unemployment rate ticked higher as well, to 3.9% from 3.8% the month before. While that’s bad news for Main Street, Wall Street celebrated. That’s because the Federal Reserve is working to slow the economy by hiking interest rates — the only tool it has to fight inflation. A still-robust job market means the central bank could continue to keep rates elevated without fear of sending the economy into a recession. If the labor market weakens, the Fed is more likely to consider a rate cut. Friday’s employment data “was a big sigh of relief for markets, with a softer job market and importantly a softer average hourly earnings readout,” wrote Matt Peron, global head of solutions at Janus Henderson Investors, in a note on Friday. “Taken together, this should give markets some hope that inflation is not as sticky as feared and raises the possibility of getting back on the disinflation trend we saw last year.”