The US employment report boosts market sentiment steadily, with the S&P 500 and Dow Jones indices reaching all-time highs simultaneously.

U.S. stock markets continued their strong momentum this week, with the three major indices all rising amid a temporary easing of uncertainties surrounding key economic data and policies. The S&P 500 and Dow Jones Industrial Average both hit record highs. Market sentiment was boosted by the latest employment report, which showed the U.S. labor market remains resilient. At the same time, the Supreme Court did not issue a ruling on the legality of the tariffs pushed by former President Trump, providing investors with temporary relief and a clear risk appetite boost.

U.S. stocks close higher across the board, with all three major indices gaining for the week

The S&P 500 (SP500) closed at 6,966.28 points on Friday, up 0.7%, setting a new record high; the Dow Jones Industrial Average (DJI) finished at 49,504.07 points, also hitting a new record, with a daily increase of 0.5%; the tech-heavy Nasdaq Index (COMP:IND) performed well, rising 0.8%. Looking at the weekly performance, the three indices have gained 1.6%, 2.3%, and 1.9% respectively, indicating sustained market buying momentum.

Non-farm payrolls meet expectations, unemployment rate drops to 4.4%

The highly watched December non-farm payroll report showed job growth roughly in line with market expectations. While there was no explosive increase in new jobs, the overall data was solid, reflecting ongoing demand for labor from businesses. The unemployment rate slightly decreased to 4.4%, further strengthening investor confidence in a “soft landing” for the U.S. economy. Analysts note that the labor market is neither overheating nor cooling rapidly, which helps the Federal Reserve maintain flexibility in monetary policy and reduces pressure for large rate hikes or premature cuts in the near term.

Alex King from Cestrian Capital Research stated that this week’s stock market performance was comprehensive and healthy. Not only did large-cap stocks continue to reach new highs, but the Russell 2000 Index (IWM) for small- and mid-cap stocks led the rally, indicating capital is beginning to flow into higher-risk, higher-growth potential assets. The Nasdaq followed closely, with technology and growth stocks remaining market focal points.

Small- and mid-cap stocks lead the rally, risk appetite among investors rebounds

King further pointed out that the commodities market also sent positive signals, with metals and oil prices rising in tandem. Meanwhile, the VIX index, which measures market fear and panic, continued to decline, indicating reduced investor concern over short-term market volatility. He believes that although the market may eventually face corrections or external shocks, as long as corporate operating expenses and earnings reports become clearer in the first quarter, the stock market is likely to maintain an upward trend.

Supreme Court has not yet ruled on tariff dispute, policy uncertainty eases

On the policy front, the U.S. Supreme Court was scheduled to rule on the legality of Trump-era tariffs this Friday but ultimately did not release a decision. Market interpretation suggests this temporarily avoids a major uncertainty that could impact global trade and corporate cost structures. The Court may issue more opinions in the coming weeks, and investors will closely monitor developments. Positive news also came from consumer data. According to a consumer survey released by the University of Michigan, the January Consumer Confidence Index was slightly above market expectations and better than December’s level, indicating that, supported by stable employment and rising stock markets, households’ outlook on the economy has improved.

Diverging U.S. Treasury yields, market interprets policy path

In the bond market, U.S. Treasury yields showed divergence. The 10-year Treasury yield slightly declined by 1 basis point to 4.17%, while the 2-year Treasury yield, which is more sensitive to monetary policy, rose 5 basis points to 3.54%, reflecting differing market interpretations of the short-term interest rate outlook.

Geopolitical risks temporarily eased, Trump cancels military action against Venezuela

On the geopolitical front, Trump announced the cancellation of plans for a second wave of military strikes against Venezuela, citing the release of political prisoners by the Venezuelan authorities and describing this move as “a very important and wise gesture.” This statement somewhat alleviated market concerns over rising geopolitical risks and contributed to the strong performance of risk assets this week.

This article, “U.S. Employment Report Steady, Boosts Market Sentiment; S&P 500 and Dow Hit Record Highs,” was first published on ABMedia.