Here’s What’s Happening in Markets Today: April 05

The U.S. economy added 303,000 jobs in March, according to data released by the Bureau of Labor Statistics (BLS) Friday, which also reported modest wage growth that eased inflation concerns.

The unemployment rate dropped to 3.8% from 3.9% the month prior, in a sign that the U.S. economy continues to remain strong. The hot jobs report came in higher than the 200,000 expected, while the unemployment rate remained in line with expectations of economists polled by Dow Jones and the Wall Street Journal. 

The jobs report pushed markets higher Friday morning in a week marked by stocks dipping on rate concerns.

Broader market ETF SPY, the SPDR S&P 500 ETF Trust rose as investors cheered the labor report, while bond ETF TLT, the iShares 20+ Year Treasury Bond ETF sank at the market open. 

According to etf.com data, among the most active ETFs on Friday was SQQQ, the ProShares UltraPro Short QQQ. The fund, which bets on falling prices of tech stocks, dropped more than 2% to start the trading day as tech rallied despite the higher-for-longer rate environment. The fund had more than 63 million in trading volume to start Friday.

While strong jobs reports indicate health of the U.S. economy, they may also signal that the economy is resilient enough to withstand the impact of higher interest rates. In other words, investors will have to wait longer for rate cuts that could boost the rate-sensitive fixed income sector. 

Currently, markets are forecasting a 56% chance the Fed will cut rates at its June policy meeting, according to the CME Fed Watch Tool—a drop from yesterday’s more optimistic 61% probability. 

Investors of all stripes have been paying close attention to the jobs report, trying to find clues on the future path of rate cuts from the Federal Reserve. For ETF investors, the jobs report impacts market sentiment on economic growth and interest rates, while also indicating growth and losses in specific industries. 

Rising tensions between Israel and Iran continued to push oil prices higher, sending oil ETFs soaring. Brent crude futures jumped to more than $90 a barrel and some of the largest oil ETFs, USO, the United States Oil Fund LP, UCO, the ProShares Ultra Bloomberg Crude Oil Fund, and DBO, the Invesco DB Oil Fund rose. 

XLE price YTD

Source: etf.com

The $39 billion Energy Select SPDR (XLE), which tracks a market cap weighted index of energy firms, climbed 9% last month, and is up 14% year-to-date, according to etf.com data.