After a bruising tariff-driven selloff in early April, U.S. equities have staged an astonishing comeback.
In just 20 trading sessions, the S&P 500 index – as tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY) – has recouped its post-tariff announcement losses and entered May on its longest winning streak since November 2023.
Yet, the rally faces a crucial test this Friday at 8:30 a.m. ET, when the Bureau of Labor Statistics releases April’s nonfarm payrolls report — the first comprehensive snapshot of the U.S. labor market since President Donald Trump unveiled sweeping new tariffs on April 2.
It’s a make-or-break moment that could either confirm the recent bullish narrative or abruptly reverse sentiment.
Recent Signals Point To A Cooling Labor Market
Early signals paint a sobering picture of the labor market. The GDP release for the first quarter of 2025 showed a 0.3% contraction, a major downside surprise that rekindled recession fears.
Private payroll processor ADP revealed earlier this week that U.S. private employers added just 62,000 jobs in April — far below consensus expectations of 108,000 and the weakest reading in nine months.
The ISM Manufacturing PMI survey also showed employment continuing to contract, while Thursday’s jobless claims jumped to 241,000, the highest weekly total since …