Stocks snapped a five-week losing streak as equities rallied during the holiday-shortened week. The S&P 500 was up 3.4% while the NDX jumped 4%. The Dow Index rose 3% last week while the small-cap RUT was up 3.3%. The positive moves came despite oil prices spiking and settling at their highest level in four years on Thursday near $111 a barrel. 

The U.S. labor market showed a stronger‑than‑expected rebound in March, with job growth snapping back after a weak February and the unemployment rate edging lower. The data is likely to keep the Federal Reserve on hold as it weighs inflation risks and slowing growth. According to the Bureau of Labor Statistics, nonfarm payrolls increased by 178,000 in March, well above economist expectations of around 60,000 and a sharp reversal from February’s revised decline of 133,000 jobs. The unemployment rate slipped to 4.3%, down from 4.4% the prior month, though the decline was influenced in part by a reduction in labor force participation. The report suggests the labor market remains resilient despite elevated interest rates, geopolitical uncertainty, and signs of slower hiring momentum earlier this year.

Job gains in March were concentrated in a handful of sectors, led by health care, which added 76,000 jobs, accounting for a large share of the monthly increase. Much of that strength reflected workers returning from a strike that had weighed on February payrolls, particularly in ambulatory health services. Other areas of strength included construction, which added 26,000 jobs, and transportation and warehousing, which rose by 21,000, suggesting a rebound from weather-related disruptions earlier in the year. Manufacturing employment increased by 15,000, marking its strongest monthly gain since late 2023. 

Wage growth showed further signs of cooling. Average hourly earnings rose 0.2% in March and were up 3.5% from a year earlier, the slowest annual pace since mid‑2021. The moderation in wage pressures aligns with the Federal Reserve’s goal of easing inflation, though officials remain cautious about declaring victory. Labor force participation fell to 61.9%, its lowest level since late 2021, indicating that some of the improvement in the unemployment rate came from workers exiting the labor force rather than stronger hiring alone.

Economists noted that while the headline number was strong, the underlying trend still points to a slow‑growth labor market, with the three‑month average of job gains hovering well below long‑term norms. Federal Reserve officials are expected to view the report as justification to remain patient as they assess inflation, energy prices, and the broader economic impact of geopolitical tensions.

While stocks rebounded last week and the Jobs data were positive, markets are still on edge due to the conflict with Iran. Reuters reported that Iran and the U.S. have received a plan to end hostilities that, if agreed, would result in an immediate ceasefire and the reopening of the Strait of Hormuz. And Axios reported that the U.S., Iran, and a group of regional mediators were discussing terms for a potential 45-day ceasefire that could lead to a permanent end to the war. This comes after President Trump extended today’s deadline to tomorrow evening that the U.S. would strike Iran’s power plants and bridges if the Strait of Hormuz isn’t opened by Tuesday. Volatility may continue in the near-term as headline risk remains elevated.

Focus this week will continue to be on headlines out of the Middle East along with oil prices. Crude settled at its highest level in four years on Thursday and remains elevated near $110 a barrel. Data will also be in focus this week with ISM Services, delayed Durable Goods and GDP numbers due. FOMC minutes are due on Wednesday afternoon and delayed PCE data comes out on Thursday morning. The week wraps up with March Consumer Price Index data on Friday morning. The inflation data will be key as energy prices rose sharply last month with expectations for increased costs for consumers as the conflict and oil prices spiked. 

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