The May labor market report delivered hotter-than-expected numbers in terms of job gains and wage growth.

Last month, U.S. employers added 272,000 nonfarm payrolls, a sharp increase from April's 165,000 and well above the expected 180,000.

Average hourly earnings witnessed a 4.1% year-on-year surge, up from an upwardly revised 4% in April, and above the expected 3.9%. On a monthly basis, earnings advanced at a 0.4% pace, accelerating from the previous 0.2%, and above the predicted 0.3%.

Overall, it was a hot jobs report on almost all fronts, except for a slight uptick in the unemployment rate from 3.9% to 4%.

The market interpreted these data as the final nail in the coffin for the already slim chances of a potential rate cut in July. Fed futures now indicate cumulative cuts of less than 50 basis points – less than two 25 basis point cuts – by the end of the year.

A solid and tight labor market indeed reduces the risks of a slowdown, which might have prompted the Fed to be more aggressive in cutting rates. Meanwhile, wage growth increases inflation risks, as demand from U.S. consumers is expected to remain strong.

Wall Street experienced a marginal decline following the report, with all major indices trading slightly in the red by 10:15 a.m. in New York.

• The SPDR S&P 500 ETF Trust (NYSE:SPY) was 0.1% lower, according to Benzinga Pro data.
• The tech-heavy QQQ Invesco Trust (NASDAQ:QQQ) also eased 0.1%.
• Blue-chip stocks, as tracked by the SPDR Dow Jones Industrial Average ETF (NYSE:DIA), inched 0.1% higher.
• Small caps, as monitored through the iShares Russell 2000 ETF (NYSE:IWM), fell 0.6%.

Sector-specific reactions were more bold. Interest-rate sensitive sectors such as real estate and materials underperformed, while financials and health care outperformed.

Here is an overview of the major stock movers – driven primarily by reactions to May's jobs report, rather than earnings reports.

Top 5 S&P 500 Gainers On Jobs Data

Top 5 S&P 500 Losers On Jobs Data

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Image generated using artificial intelligence via Midjourney.