US stocks rally after May jobs data show a strengthening labor market

• US stocks rose on the latest jobs data that indicate a strengthening labor market.
• "While the job gains were somewhat modest relative to expectations, the good news is the figure rebounded from last month's disappointing miss," an analyst said.
• The 10-year US Treasury yields slightly fell to 1.56% compared with Thursday's 1.62%.

US stocks rose Friday as investors cheered May jobs data that indicated a strengthening labor market after a disappointing April report.

Technology stocks led the rally in the S&P 500 while mega-cap stocks pulled the Nasdaq 100 up to a one-month high.

Non-farm payrolls showed the US economy added 559,000 jobs in May, the Bureau of Labor Statistics said Friday. The figure was slightly lower than the 674,000 median estimate economists surveyed by Bloomberg were predicting. The unemployment rate dipped.

"While the job gains were somewhat modest relative to expectations, the good news is the figure rebounded from last month's disappointing miss," Charlie Ripley, senior investment strategist at Allianz Investment Management, said in a note.

He continued: "Overall, today's report does provide progress in the right direction, but it also raises uncertainty around the inflation debate with wage pressures beginning to creep into the labor market."

The reading shows a sharp acceleration from April's dismal report, which saw job growth land well below economist forecasts. The May increase marks a fifth straight month of job additions, albeit modest.

"The Fed is watching all of the economic data closely and although they won't react to any one particular number, they are likely to remain concerned that jobs are being created at a slower pace than they would like - despite the fact that monetary policy is extraordinarily loose," Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, said.

The worst-case scenario for the Fed, he added, is for inflation to increase at a faster pace while the job market heals at a much slower rate.

In the bond market, the 10-year US Treasury yields slightly fell to 1.56% compared with Thursday's 1.62%.

US stocks closed mostly lower Thursday as investors mulled over a new report that President Joe Biden may be open to a lower tax hike for corporations.

Here's where US indexes stood at the 4:00 p.m. ET close on Friday:

• S&P 500: 4,229.90, up 0.88%
• Dow Jones industrial average: 34,756.39, up 0.52% (179.35 points)
• Nasdaq composite: 13,814.49, up 1.47%

Ford could climb another 12% with a boost from its refreshed vehicle lineup and inflation, JP Morgan said in a note to clients. Analysts reiterated their "overweight" rating and increased their price target to $18 from $16.

Clean Energy Fuels extended its two-day gain to as much as 36% as social media chatter about the firm spiked 445%, according to data from HypeEquity.

As for meme stocks, Bank of America said it will stop covering GameStop and will suspend its rating of Bed Bath & Beyond. Neither company has issued material updates or news to justify the surge in their stock prices, the bank said.

Meanwhile, billionaire Bill Ackman's special purpose acquisition company Pershing Square Tontine Holdings fell as much as 11.6% Friday after investors were unimpressed when the billionaire's SPAC confirmed it is in talks to reach a deal to acquire 10% of Universal Music.

In cryptocurrencies, bitcoin slipped as much as 8% after Elon Musk signaled a potential breakup with the digital asset by posting a broken-heart emoji and a reference to a popular Linkin Park song. Bitcoin has fallen more than 40% since its April record high of near $65,000.

Crude prices are still hovering near this week's highs. West Texas Intermediate crude was up 1.02%, to $69.51 per barrel. Brent crude, oil's international benchmark, was also up 0.65%, to $71.77 per barrel.

Gold was up 1.07% to $1,890.86 an ounce. The precious metal popped following the disappointing employment report, Ed Moya, senior analyst at Oanda, said.