VOO Hits Record Highs as Jobs Data Land in Goldilocks Zone

U.S. stocks surged to record highs Thursday after the Bureau of Labor Statistics reported stronger-than-expected job growth for June.

Employers added 147,000 jobs during the month, topping economists' expectations of 106,000. Meanwhile, the unemployment rate ticked down to 4.1% from 4.2%, coming in below the forecasted 4.3%. 

Average hourly earnings rose by 0.2% month over month and 3.7% year over year, a tenth of a percentage point below expectations on both counts. 

Together, the data paints a picture of a labor market that’s neither too hot nor too cold—strong enough to dispel recession worries but not strong enough to rekindle inflation fears. The “Goldilocks” reading was well-received by equity markets.

VOO Hits New Record

ETFs tied to the S&P 500, like the Vanguard S&P 500 ETF (VOO), rose just under 1% to a fresh record following the release. VOO is now up 7.5% year to date, a sharp turnaround from its April low when it was down 15%.

The tech-heavy Invesco QQQ Trust (QQQ) climbed more than 1%, bringing its year-to-date gain to over 9%. QQQ had been down 18.5% at its April trough.

While the jobs report makes an imminent Federal Reserve rate cut less likely, stock investors appear unbothered by the delay. Most would rather see solid growth and falling inflation than a rushed rate cut that signals potential trouble.

TLT Edges Down

On the other hand, bond prices fell as Treasury yields edged higher, with the 10- and 30-year yields both rising five basis points. That pushed the iShares 20+ Year Treasury Bond ETF (TLT) down 0.6% midday, while the iShares 7-10 Year Treasury Bond ETF (IEF) dropped 0.4%. 

Probabilities based on the pricing of fed funds futures suggest the next Fed rate cut could come in September.