The latest on markets, the jobs report and the debt ceiling

The Dow on Friday saw its best one-day gain since January, as Wall Street cheered the debt ceiling bill and the May jobs report showed a cooldown in some parts of the labor market.

All three major indexes rose for the week, with the Nasdaq Composite notching its sixth straight week of gains.

The White House said Friday that President Joe Biden will sign the bill raising the debt ceiling “as soon as tomorrow,” leading investors to breathe a sigh of relief after weeks of concern that the United States could default on its debt for the first time.

Meanwhile, the May jobs report showed that the labor market remains hot but has some pockets of cooling.

While job gains surged more than expected, wage growth slowed and unemployment rose past economists' expectations, suggesting that the Federal Reserve's interest rate hikes are working without inducing mass job losses.

Traders see a 70% chance that the Fed will pause interest rates at its next meeting on June 13-14, according to the CME FedWatch Tool.

Still, the central bank will have to parse more data before it makes its decision. The May Consumer Price Index and Producer Price Index reports, two key inflation gauges, are due the same days that the Fed is slated to meet later this month.

The VIX, Wall Street's fear gauge, fell to 14.6, closing below 15 for the first time since February 2020.

The Dow soared 701 points, or 2.1%.

The S&P 500 gained 1.4%.

The Nasdaq Composite added 1%.

As stocks settle after the trading day, levels might still change slightly.

The Fed is at a pivotal point in its current war on inflation, which means some officials might start dissenting as soon as the June policy meeting.

"As you come to turning points, there's always somebody who doesn't want to carry along with it, so yes, I think (dissenting) is characteristic of the Fed when opinions are shifting, so I think that is quite likely," Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a webinar this week.

Members can dissent because they think the central bank should pause rates or hike at a different pace.

At this point, the Fed's decisions aren't as easy or clear cut as when inflation was obviously running red hot last summer, economists said.

Still, it doesn't mean they haven't already been debating with their counterparts. But the optics of not eventually reaching a unanimous decision might be problematic for the central bank's credibility.

"There is usually no dissent in terms of policy moves, and in terms of confidence, they have to show that their agreement is unanimous because then the markets are going to start to second guess them," said Eugenio Alemán, chief economist at Raymond James.

The US labor market picked up momentum in May, once again defying expectations of a slowdown. But Federal Reserve officials are still likely to suspend rate hikes in their upcoming policy meeting because of broader trends pointing to a weakened economy later in the year.

The debate over suspending rate increases or hiking yet again later this month has remained intense, and May's robust jobs report certainly makes it even more difficult to decipher what's going on in the economy.

But there does seem to be enough of an argument for Fed officials to defend a pause, or a "skip," in rate increases when they meet on June 13-14.

That would snap a streak of 10 consecutive rate hikes that raised the central bank's benchmark lending rate to a range of 5-5.25%, the highest level in more than 15 years.

Some officials have said a pause would allow them to assess the impacts of the central bank's most aggressive rate-hiking campaign since the 1980s and some have also cautioned of additional factors expected to further slow economic activity, such as tougher lending standards, along with other lagged effects of tighter monetary policy. Many economists, including those at the Fed, still expect a recession later in the year.

That's essentially the argument for a pause. President Joe Biden's pick to be the Fed's second-in-command said as much on Wednesday, but cautioned that it doesn't mean the Fed can't resume rate increases if needed.

"A decision to hold our policy rate constant at a coming meeting should not be interpreted to mean that we have reached the peak rate for this cycle," said Federal Reserve Governor Philip Jefferson at a conference in Washington, DC, this week. "Indeed, skipping a rate hike at a coming meeting would allow the Committee to see more data before making decisions about the extent of additional policy firming."

The US stock market rocketed higher as the Dow soared 730 points, or 2.2%, after the Labor Department announced a much-better-than-expected jobs report for May and the Senate passed a bill to suspend the debt ceiling, allowing the Treasury to start borrowing money again to avoid a catastrophic default.

The Dow was on pace for its best day since November 10.

The broader S&P 500 rose 1.5% and was on pace for its best day in a month. The Nasdaq Composite was up 1.1%.

In Minnesota, the Minneapolis Park and Recreation Board is having a more successful go so far this year of hiring workers for its vast system of parks, lakes and recreational areas, Rhonda Heryla, the board's senior human resources consultant, told CNN.

"It feels different this year in trying to get people in the door than it did the last couple of years," Heryla said. 

While some employment gaps persist — for positions such as lifeguards and seasonal park maintenance — the park board has seen some success from not only expanding its outreach efforts (from signage and QR codes to recruitment at high schools) but also from word of mouth. 

"We're looking at whether we could find some non-traditional applicants who might be interested in coming back into the workforce," she said, "like retirees or folks that may be wanting to work just a few hours but not have a full commitment of 40 hours a week through the summer."

Those types of jobs include aquatic invasive species inspectors at boat landings as well as golf course positions. 

"It seems like if we can get one or two folks, they'll start to let their friends know about it," she said.

Shares of wireless carriers fell Friday on a report that Amazon is in talks with telecom companies to offer mobile phone services to Prime members.

Bloomberg, citing anonymous sources, reported Friday that the company is considering making the service either free or at a low cost, and is negotiating with Verizon, T-Mobile and Dish Network. AT&T has also been part of some discussions, according to Bloomberg.

AT&T shares fell 4.7%, Verizon slid 4.6% and T-Mobile declined 8.4%. Dish Network shares rose 23.4%.

T-Mobile denied that it is in discussion with Amazon.

"We are not in discussions about inclusion of our wireless in Prime service, and Amazon has told us they have no plans to add wireless service," a T-Mobile spokesperson told CNN in a statement.

The Dow surged Friday as Wall Street applauded both the Senate's passage of the debt ceiling bill and the strong May jobs report.

The blue-chip index was up 578 points, or 1.8%, in midday trading, on pace for its best one-day gain since early January. The S&P 500 rose 1.3% and the Nasdaq Composite gained about 1%.

Meanwhile, the VIX, Wall Street's fear gauge, fell to 14.7 by midday — the lowest level the VIX has reached on an intraday basis since July 2021.

If the VIX closes below 15, it'll be the first time it ends a trading session below that level since before the pandemic hit stateside: February 2020.

The monthly jobs report is composed of two surveys to measure employment levels and activity: one that surveys non-farm businesses about employment, hours and earnings, and the other of households to obtain the labor force status of the population with demographic details.

The unemployment rate comes from the latter, which is often volatile: The last time (outside of the onset of the pandemic) when the United States saw such a large swing upward in the unemployment rate was in November 2011, when it jumped 0.4 percentage points. In December 2011, the unemployment rate fell 0.5 percentage points, according to BLS data.

"It is not uncommon for these two surveys to tell different stories, but the magnitude of the difference last month was larger than normal and makes the interpretation of what is going on in the job market much more difficult," Marisa DiNatale, senior director of Moody's Analytics, noted Friday.

"Data released earlier this week showed that the number of job openings rose and the number of people filing for unemployment insurance did not change much and remains low. These are consistent with the payroll survey at least."

Usually when the economy adds a lot of jobs in a given month the unemployment rate ticks down. That wasn't the case in May.

Despite the 339,000 new jobs added last month, the unemployment rate rose to 3.7% from 3.4% in May. That's the biggest one-month jump since April 2020.

What gives?

By definition, the unemployment rate captures the share of unemployed people as a percentage of the labor force. The labor force is the total number of people employed and unemployed. To be considered unemployed, you don't necessarily have to have been laid off recently.

The Bureau of Labor Statistics classifies someone as unemployed if they aren't working but are available for work and made a specific effort in the past month to find a job. If they don't satisfy that criteria, they aren't considered part of the labor force.

Last month, the number of unemployed people rose by 440,000 to 6.1 million. But the number of people employed fell by 310,000 to 160.7 million. The net effect of that meant the labor force grew by 130,000 people to 166.8 million. So, mathematically, when you divide 6.1 million by 166.8 million, you'll arrive at the 3.7% unemployment rate.

Numbers aside, this means that more people started actively looking for jobs last month even if they weren't recently let go from their job. At the same time, fewer people had jobs.

But wait – weren't 339,000 new jobs added last month?

That is correct. Technically speaking, nonfarm payroll employment grew by 339,000. That figure is the product of the BLS' monthly survey of over 100,000 businesses and government agencies. However, the data used to calculate the unemployment rate comes from a different monthly survey of around 60,000 households that the Census Bureau conducts for the BLS.

Put plainly, one survey asks businesses how many people they hired and laid off last month and the other survey asks individuals if they were hired or laid off last month. The survey of workers found that 43,000 fewer people were self-employed in May compared to April. That figure is not captured in the survey of businesses. That can help explain why the unemployment rate rose, even though there were much stronger-than-expected job gains in May.