What you need to know…

The S&P 500 Index ($SPX) (SPY) on Friday closed up +0.34%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.40%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.15%.

U.S. stock indexes Friday recovered from early losses and closed slightly higher. Stocks eked out modest gains Friday on optimism the U.S. economy is strong enough to weather interest rate hikes from the Fed after the U.S. unemployment rate in March fell more than expected to a 2-year low.  Stocks Friday morning initially moved lower after signs of wage and prices pressures pushed T-note yields higher.  Also, stocks early Friday were weighed down after U.S. manufacturing activity last month unexpectedly declined.

U.S. Mar nonfarm payrolls rose +431,000, weaker than expectations of +490,000, although Feb payrolls were revised upward to +750,000 from the previously reported +678,000.  The Mar unemployment rate fell -0.2 to a 2-year low of 3.6%, showing a stronger labor market than expectations of 3.7%.

U.S. Mar average hourly earnings rose +5.6% y/y, stronger than expectations of +5.5% y/y and the biggest increase in 22 months.

U.S. Feb construction spending rose +0.5% m/m, weaker than expectations of +1.0% m/m.

The U.S. Mar ISM manufacturing index unexpectedly fell -1.5 to a 1-1/2 year low of 57.1, weaker than expectations of an increase to 59.0. The Mar ISM prices paid sub-index rose +11.5 to a 9-month high of 87.1, stronger than expectations of 80.0.

Today’s stock movers…

Transport companies and rail stocks Friday sold off amid growing concerns about a decline in freight demand due to soaring inflation and high fuel costs.  JB Hunt Transport Services (JBHT) closed down more than -9% Friday to lead losers in the S&P 500.  Also, Old Dominion Freight Line (ODFL) closed down more than-6% to lead losers in the Nasdaq 100.  In addition, Norfolk Southern (NSC) closed down more than -6%, CSX (CSX) closed down more than -5%, and Union Pacific (UNP), CH Robinson Worldwide (CHRW), and FedEx (FDX) closed down more than -4%.

Qualcomm (QCOM) closed down more than -3% Friday after JPMorgan Chase removed the company from its Analyst Focus List, citing a pullback in consumer spending. 

Walgreens Boots Alliance (WBA) closed down more than -2% Friday to add to Thursday’s -5% fall after Baird downgraded the stock to neutral from outperform, saying the company is “simply too complicated.” 

Edwards Lifesciences (EW) closed up more than +4% Friday to lead gainers in the S&P 500 after Citigroup added the company to its Focus List.

U.S.-listed Chinese stocks Friday moved sharply higher after Bloomberg News reported that Chinese authorities are preparing to give U.S. regulators access to auditing reports of most of the 200-plus companies listed on U.S. exchanges.  NetEase (NTES) closed up more than +6% to lead gainers in the Nasdaq 100.  Also, Pinduoduo (PDD) and Baidu (BIDU) closed up by more than +6%.  In addition, Alibaba Group Holding (BABA) and JD.com (JD) closed up more than +1%.

Across the markets…

June 10-year T-notes (ZNM22) on Friday fell by -20.5 ticks, and the 10-year T-note yield rose +4.8 bp to 2.386%.  T-notes retreated Friday after the U.S. Mar payroll report showed signs of wage pressures that bolsters the case for the Fed to boost the fed funds target range by 50 bp at the next FOMC meeting in May.  Also, the Mar ISM prices-paid sub-index rose more than expected to a 9-month high of 87.1.  A jump in 10-year German bund yields Friday also weighed on T-notes after Eurozone March consumer prices rose at the fastest pace on record.