Trump "U.S.-China Talks in London on the 9th"... S&P Breaks Through 6,000 Mark in Four Months [Global Market A/S]

The U.S. stock market continued its relief rally as the key economic indicator, the non-farm payroll report, far surpassed market expectations. Major tech companies rose across the board, recouping a significant portion of their losses since the launch of the Donald Trump administration.

On the 6th local time at the New York Stock Exchange (NYSE), the S&P500 index closed at 6,000.36, up 61.06 points or 1.03% from the previous trading day, marking the highest level since February. Microsoft hit an all-time high, while the Nasdaq jumped 231.5 points or 1.2% to 19,529.95, and the Dow Jones Industrial Average closed up 443.13 points or 1.05% at 42,762.87.

According to the non-farm employment report for May released this morning by the Bureau of Labor Statistics under the U.S. Department of Labor, 139,000 jobs were created in a month, exceeding the Wall Street consensus of about 125,000 compiled by Dow Jones. This result stands in contrast to the weak ADP private employment report earlier this week, which recorded an increase of only 37,000 jobs and raised concerns.

Healthcare and medical service jobs posted a high of 62,000, about 20,000 above the 12-month average, while leisure and hospitality saw an increase of 48,000, with the service sector leading job growth. Despite a decrease of 22,000 government jobs due to federal workforce reductions, the increase in private sector jobs more than offset this.

The unemployment rate remained stable at 4.2% for the third consecutive month, contrary to some market forecasts of a rise to 4.3%. However, some analysts noted that the stability in unemployment is partly due to a shrinking labor force as a result of decreased immigration. Additionally, the total number of jobs for March and April was revised downward by 95,000, indicating possible cracks in the labor market.

Today's job data is close to the 'Goldilocks' scenario previously forecast by JP Morgan. Chief economist Michael Feroli had suggested that if jobs came in under 100,000, the market would be shocked, but results between 140,000 and 170,000 would be ideal.

With the release of stronger-than-expected employment data, expectations for a Fed (Federal Reserve) rate cut receded rapidly. In the interest rate futures market, the likelihood of a September rate cut fell from 90% on Thursday to 70%. The 10-year U.S. Treasury yield briefly rose 11.1bp (1bp=0.01%p) to 4.506%, while the two-year yield remained in the 4% range, and the 30-year yield approached 5%.

Seema Shah, chief strategist at Principal Asset Management, commented, "There is almost no urgency for the Fed to cut rates," and "waiting until the fog of trade lifts will reduce the risk of policy mistakes." Adam Hetts, portfolio manager at Janus Henderson Investors, projected, "A solid employment report reinforces the narrative of a slow economic deceleration," and "tariff uncertainties will raise market sensitivity to future indicators."

Despite the strong jobs data, President Trump maintained pressure on the Fed. He asserted on Truth Social, "If (Jerome Powell) had lowered rates sooner, Treasury yields would be much lower," adding, "There is virtually no inflation right now, and massive losses are being caused." According to FedWatch by CME Group, about 97% of futures market participants expect a rate hold at the Federal Open Market Committee (FOMC) meeting scheduled for the 17th-18th of this month.

● Breakthrough in Tariff Talks Expected? U.S. and China to Meet in London Next Week

Meanwhile, signs of progress emerged in trade talks. According to Reuters, China approved temporary rare earth export permits for suppliers to the U.S. Big Three automakers: GM, Ford, and Stellantis.

Previously, Trump announced that Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and USTR Representative Jamison Greer would meet with Chinese representatives in London on the 9th local time. This is viewed as a follow-up to the previous day's phone call with China's President Xi Jinping.

However, open conflict with Elon Musk appears to be ongoing. Reuters and others reported, citing anonymous sources at the White House, that "President Trump is not interested in talking to Musk," and "no phone calls are planned."

In a CNN interview, Trump also stated, "I don't even think about Elon," and continued, "That guy has a problem. I think the poor guy has real issues," maintaining his criticism. Meanwhile, according to NBC, the White House may consider donating or selling the red Tesla Model S that Trump purchased directly in March.

Musk continues to criticize Trump's tax cut plan as a "disgusting bill," keeping the tension alive. House Speaker Mike Johnson, attempting to deescalate the situation, remarked, "I don't argue with Musk about how to build rockets, so I hope he wouldn't argue about how to draft and pass bills," revealing his discomfort.

● Tesla Entangled in Political Debate... Concerns Over Q2 Delivery Volume

Tesla rebounded from a 14% drop the previous day to close up 3.67%. Wedbush analyst Dan Ives commented, "Musk needs Trump and Trump needs Musk," adding, "The two making up would provide major relief for Tesla stock."

On the other hand, Goldman Sachs lowered its target price from $295 to $285 while maintaining a neutral stance. With sales weakening across the U.S., Europe, and China, the forecast for Q2 deliveries this month was sharply reduced from 410,000 units to 365,000 units. Adam Jonas of Morgan Stanley also showed caution, saying, "Emotions are running high. I'm not changing the long-term target, but I'm preparing for short-term volatility."

Among individual stocks, Joby Aviation and Archer Aviation each surged 7~8% on the back of Trump's executive order for drone advancement. Trump intends to accelerate domestic development and manufacturing of drones and support related cargo and logistics projects through this order.

Online brokerage Robinhood Markets, viewed as a strong candidate for S&P500 inclusion, jumped more than 3%, while Circle Internet Group, which succeeded in an IPO the previous day, soared another 29.4% on the second day. Recursion Pharmaceuticals rose over 20% after announcing the open-source release of the AI drug development model 'Boltz-2' in cooperation with MIT.

Jonghak Kim, jhkim@wowtv.co.kr