Wall Street rises to records after the unemployment rate improves

Audio By Carbonatix

NEW YORK (AP) — U.S. stocks hit records Friday following a mixed report on the U.S. job market, one that may delay another cut to interest rates by the Federal Reserve but does not slam the door on it.

The S&P 500 climbed 0.6% and topped its prior all-time high set earlier in the week. The Dow Jones Industrial Average added 237 points, or 0.5%, and likewise set a record, while the Nasdaq composite led the market with a 0.8% gain.

The moves came after the U.S. Labor Department said employers hired fewer workers during December than economists expected, though the unemployment rate improved and was better than expected. It reinforced how the U.S. job market may be in a “ low-hire, low-fire” state and may hopefully avoid a recession.

On Wall Street, power company Vistra soared 10.5% to help lead the market after signing a 20-year deal to provide electricity from three of its nuclear plants to Meta Platforms. Big Tech companies have been signing a string of such deals to electrify the data centers powering their moves into artificial-intelligence technology.

Oklo jumped 7.9% after saying it also signed a deal with Meta Platforms that will help it secure nuclear fuel and advance its project to build a facility in Pike County, Ohio.

Homebuilders and other companies involved in the housing market were strong in their first trading after President Donald Trump announced a plan to lower mortgage rates. Trump on late Thursday called for the purchase of $200 billion in mortgage bonds, similar to how the Fed in the past has bought bonds backed by mortgages to bring down mortgage rates.

Builders FirstSource, a supplier of building products, jumped 12% for one of the biggest gains in the S&P 500 along with Vistra. Among homebuilders, Lennar rallied 8.9%, D.R. Horton climbed 7.8% and PulteGroup rose 7.3%.

They helped offset a 2.7% drop for General Motors. The auto giant said it will take a $6 billion hit to its results for the last three months of 2025 related to its pullback from electric vehicles. That’s on top of the $1.6 billion in charges GM took in the prior quarter. Fewer tax incentives and easier fuel-emission regulations have been eating into demand for EVs.

WD-40 tumbled 6.6% after reporting a weaker profit for the latest quarter than analysts expected. Chief Financial Officer Sara Hyzer said the soft numbers were primarily because of timing issues, not weaker demand from end customers, and the company stood by its financial forecasts for the upcoming year.

All told, the S&P 500 rose 44.82 points to 6,966.28. The Dow Jones Industrial Average added 237.96 to 49,504.07, and the Nasdaq composite climbed 191.33 to 23,671.35.

In the bond market, Treasury yields were mixed.

Friday’s improvement in the unemployment rate was enough to get traders to ratchet back expectations for a cut to interest rates at the Fed’s next meeting, which is scheduled for later this month. Traders are now forecasting just a 5% chance of that, down from 11% a day before, according to data from CME Group.

But traders nevertheless still largely expect the Fed to cut rates at least twice this upcoming year.

Whether they’re correct carries high stakes for financial markets. Lower interest rates can goose the economy and push up prices for investments, though they can also worsen inflation at the same time. And inflation has stubbornly remained above the Fed’s 2% target.

“Until the data provide a clearer direction, a divided Fed is likely to stay that way,” according to 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.”

The yield on the 10-year Treasury eased to 4.16% from 4.19% late Thursday. It tends to track expectations for longer-term economic growth and inflation.

The two-year Treasury yield, which more closely tracks forecasts for what the Fed will do with short-term interest rates in the near term, rose to 3.53% from 3.49%.

A separate report released Friday morning suggested sentiment among U.S. consumers is strengthening, particularly among lower-income households. Perhaps more importantly for the Fed, the preliminary report from the University of Michigan also said expectations for inflation in the coming 12 months may be at their lowest level in a year. That could give it more freedom to cut interest rates.

Hopes for both lower interest rates and a solid economy have helped other areas of the stock market climb recently, wresting leadership away from the Big Tech and AI stocks that dominated the market for years. The smaller stocks in the Russell 2000, for example, climbed 4.6% this week, much more than the 1.6% rise of the S&P 500.

In stock markets abroad, indexes rose across much of Europe and Asia.

The French CAC 40 climbed 1.4%, and Japan’s Nikkei 225 jumped 1.6% for two of the world’s bigger gains.

___

AP Business Writers Chan Ho-him and Matt Ott contributed.