America's economy receives a surprise boost

Employers added 272,000 jobs in May, according to the latest jobs report released Friday.

This was higher than the 190,000 forecast by economists.

The unemployment rate, however, edged up slightly to 4 percent - the first time it has breached that threshold since January 2022. 

Stock futures initially plummeted following the report - because Wall Street worried a hot jobs report would deter the Federal Reserve from cutting interest rates. Higher rates are bad news for business as they cut consumer spending.

But the major indices recovered and were green by 10.30am, an hour after the market opened, in a boost for 401(K)s.  

The S&P 500 fell following the latest jobs report - but later recovered to go green

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Ultimately, investors decided that the good news of a buoyant economy creating jobs outweighed fears of sticky inflation.  

Investors had been awaiting the payrolls data for more clues on the state of the US economy and when the Federal Reserve may start cutting interest rates. 

Any indication the economy is too strong and wages might rise - and fuel more inflation - makes Fed chairman Jerome Powell less likely to cut rates.  

Ultimately, the data killed any chance of a rate cut at the Fed's meeting next week - and the one in July.

But Wall Street thinks there is still a 50 percent chance there will be a rate cut at the following meeting in September. 

Friday's report will likely underscore Fed officials' intention to delay any cuts to their benchmark interest rate while they monitor inflation and economic data. 

Though Powell has said he expects inflation to continue to ease, he has stressed that the Fed's policymakers need 'greater confidence' that inflation will fall back to the 2 percent target before they would reduce borrowing costs. 

Annual inflation is at 3.4 percent, according to the latest data from April.  

'This report is going to complicate the Fed's job,' said Julia Pollak, chief economist for ZipRecruiter. 'No one's getting those very clear signals that they were hoping for that a rate cut is appropriate in July or September.'

Last month's hiring occurred broadly across most of the economy. 

But job growth was particularly robust in health care, which added 84,000 jobs, and restaurants, hotels, and entertainment providers, which gained 42,000.