Wall Street hits records after the unemployment rate improves
U.S. stocks climbed to record levels on Friday after the unemployment rate improved in a mixed report on the U.S. jobs market, a combination that helped investors push equities higher even as it left room for delays in Federal Reserve rate cuts. The Labor Department said employers hired fewer workers during December than economists expected, but the unemployment rate improved to 4.4%—better than expected.
By late trading, the S&P 500 rose 0.6% to an all-time high of 6,966.28. The Dow Jones Industrial Average climbed 237.96 points, or 0.5%, to 49,504.07, and the Nasdaq Composite gained 191.33 points, or 0.8%, to 23,671.35.
Market momentum came as traders weighed what the jobs data could mean for the Fed’s next meeting later this month. The employment report reinforced the idea that the labor market may be in a “low-hire, low-fire” state and may still be able to avoid a recession, according to the way traders were interpreting the data.
With the unemployment rate improvement in focus, traders ratcheted back their expectations for a near-term interest-rate cut. Data from CME Group showed traders were forecasting just a 5% chance of a cut at the Fed’s next meeting, down from 11% a day earlier, though they still largely expected at least two cuts over the year.
Corporate news also helped drive gains in specific sectors. Vistra surged 10.5% after signing a 20-year deal to provide electricity from three nuclear plants to Meta Platforms, as Big Tech companies continue signing long-term power contracts aimed at supporting data centers used for artificial intelligence.
Oklo rose 7.9% after saying it also signed a deal with Meta Platforms that would help it secure nuclear fuel and move forward with a project in Pike County, Ohio. The deals fit into a broader theme in the trading session, with investors looking beyond just job and rate signals to the companies positioned for the power needs of AI expansion.
The rally extended into housing-linked names after President Donald Trump called for the purchase of $200 billion in mortgage bonds late Thursday, describing an approach similar to how the Federal Reserve has bought mortgage-backed bonds in the past to lower mortgage rates. Builders FirstSource jumped 12% for one of the biggest gains in the S&P 500, while Lennar rallied 8.9%, D.R. Horton climbed 7.8% and PulteGroup rose 7.3%.
Some companies moved in the opposite direction. General Motors fell 2.7% after saying it will take a $6 billion hit to its results for the last three months of 2025 related to its pullback from electric vehicles, on top of $1.6 billion in charges it recorded in the prior quarter. WD-40 dropped 6.6% after reporting a weaker profit than analysts expected, though the company’s chief financial officer, Sara Hyzer, said the shortfall reflected timing issues rather than weaker demand and that the company stood by its forecast for the upcoming year.
Elsewhere in the session, bond yields were mixed, with the 10-year Treasury yield easing to 4.16% from 4.19% late Thursday. The two-year Treasury yield rose to 3.53% from 3.49%, and the market also reacted to a separate report on consumer sentiment released earlier in the day, along with a preliminary University of Michigan report that said 12-month inflation expectations may be at their lowest level in a year.
Investors’ focus on unemployment, inflation expectations and the path for rates also coincided with a broader rotation in the stock market, with leadership shifting away from big tech and AI names that dominated in prior years. The smaller stocks in the Russell 2000 climbed 4.6% this week, versus a 1.6% rise for the S&P 500, and major indexes rose across much of Europe and Asia, including France’s CAC 40 and Japan’s Nikkei 225.
“Until the data provide a clearer direction, a divided Fed is likely to stay that way,” said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management. “Lower rates are likely coming this year, but the markets may have to be patient.”