Why Stocks Are Diving After a Strong May Jobs Report

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Alex Ossola (0:33)

Another month of strong jobs growth is making it more likely that the Fed will raise interest rates, not cut them. Plus, the Nasdaq had its worst day of 2026, falling more than 4% on worries about inflation and AI demand.

And $264 for a fish dinner? Public official spending is making taxpayers furious.

Scott Calvert (0:54)

There was beer can coolers in Daytona Beach, Costco groceries in Connecticut, and there's another community in North Carolina where somebody bought ammunition with their town credit card.

Alex Ossola (1:04)

It's Friday, June 5th. I'm Alex Ossola for The Wall Street Journal. This is the PM Edition of What's News, the top headlines and business stories that move the world today.

The jobs market had another strong showing in May. A report out today from the Labor Department says that the US added 172,000 jobs last month, blowing past analyst expectations. Meanwhile, the unemployment rate held steady at 4.3%. WSJ economics reporter Matt Grossman says that suggests the labor market is recovering from a weaker period last fall and winter.

Matt Grossman (1:41)

We got a really strong jobs report for May. And not only that, but we got really strong upward revisions to job creation in March and April. And so now things are looking really a lot brighter than they were at the start of the year.

Over many of the past several months, health care and social services and education were some of the most important sectors in hiring. Things have broadened out quite a bit. So in May, hiring was really strong in leisure and hospitality.

That's jobs like restaurant and hotel workers. There were job gains in manufacturing and construction. And local governments actually added a lot of workers as well.

Alex Ossola (2:21)

But Matt says that many people are still anxious about the job market and the economy.

Matt Grossman (2:26)

It can still be a frustrating labor market if you're someone who is looking for a job and you've been on the sidelines for a long time. And wage growth in May was pretty weak. And that's been a trend for several months now. Stagnating wage growth is coming at a time when expenses are rising. And obviously that's a really challenging combination.

Alex Ossola (2:44)

As for the Fed, this report makes a rate cut less likely than a rate hike this year. Some Fed officials have already begun suggesting that in recent days. And futures markets reflect a roughly 50% bet that the Fed will raise rates at its October meeting. That meeting is less than a week before the midterms. That might be a tough situation for the new Fed chair Kevin Warsh, who President Trump picked because he wants him to lower interest rates.

SpaceX is expected to make its stock market debut next week in what could be the biggest IPO ever. And, as the company works to drum up investor interest, banks are sharing their projections with select investors. Morgan Stanley is one of the banks working with SpaceX on its IPO. We're exclusively reporting that the bank told its top investors that SpaceX's revenue could reach $3.4 trillion in 2040 Last year, SpaceX posted revenue of $18.7 billion and a loss of $4.9 billion. So how would the company hit Morgan Stanley's projections? Bankers anticipate that revenue from SpaceX's small AI business will grow dramatically and that it'll make up the bulk of the company's revenue after this year.

And today, SpaceX said that Google has agreed to pay it nearly $1 billion a month in a cloud computing deal that gives SpaceX a new stream of revenue for its AI business.

Meanwhile, thousands of current and former SpaceX employees who own a piece of the company are eagerly awaiting the IPO. These engineers, technicians and baristas who worked on SpaceX campuses, will be able to cash in way more easily after SpaceX is public, earning them thousands or even millions of dollars. And for more on SpaceX, on What's News Sunday, we'll be discussing how its IPO could redefine the global space economy. And WSJ's Take on the Week podcast, also out this Sunday, will be digging into whether SpaceX is really worth its targeted $1.77 trillion valuation.

Earlier this week, we told you about the firms behind indexes like the NASDAQ 100 that were making it easier to add companies to their benchmarks just after they go public in this year of the mega IPO. Some index providers say this helps track the market more accurately. But skeptics say it can add risk for investors because there's not as much public information available about newly listed companies, and they could be paying too much for the stock. Investors expected the S&P 500 to fast-track IPOs, too. But now S&P Dow Jones Indices says that it actually won't do that. The decision means that the newly listed companies will have to wait at least a year before they can be included in the index. WSJ investing columnist Jason Zweig has been following the issue, and earlier this week he told us index providers should keep the best interests of investors, not the companies, in mind. But he says that if you want to hop on the mega IPO train, there are plenty of ways to do that more quickly.