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The U.S. economy aded 428,000 jobs in April, the Labor Department reported today, May 6. That matched the jobs gains in M arch and was above e the 380,000 jobs expected by economists surveyed by Bloomberg. The official unemployment rate remained at 3.6%. Economists had expected a drop to 3.4%.

So why did the stock market decide this was bad news?

Because earnings were up in April by 5.5% from April 2021. That means, investors concluded, continued pressure on the Federal Reserve to raise interest rates to restrain wage-driven inflation.

And because the labor participation rate–the share of the potential working population that is actually working–fell to 62.2%, the lowest level in three months. The explanation for why this might be a negative for the Fed and its inflation fighting strategy is a bit complicated and somewhat speculative. But the through is that labor participation rate dropped because of a rise in the quit rate, which rose in the month–and the drop in participation indicate that some/many workers still feel that wages are going higher (so quit nd look for an other better job) or that they aren’t high enough–yet–to pull them back into the work force.

As of the close today in New York the Standard & Poor’s 500 was down 0.57% and the Dow had lost 0.29%. The NASDAQ Composite was lower on the day with a drop of 1.40%. The small cap Russell 2000 led the way down with a retreat of 1.76% The iShares Emerging Markets ETF (EEM) lost 1.35%.

The yield on the 10-year Treasury rose to 3.12%, up 8 basis points on the day.

U.S. benchmark West Texas Intermediate crude gained 2.16% to $110.60 a barrel.