Strong jobs, sticky inflation and profits lower Fed cut odds

U.S. employers added 115,000 payrolls in April and the unemployment rate held at 4.3%. Economists had expected roughly 65,000 new jobs. The six-month moving average for payroll gains is about 55,000, the highest level in a year.

The consumer price index rose 3.8% year over year in April. Core CPI, which excludes food and energy, increased 2.8% over the same period. Both readings remain above the Federal Reserve’s 2% inflation target.

Companies in the S&P 500 that have reported first-quarter results posted aggregate earnings about 20.2% higher than analysts’ estimates. The S&P 500 recorded its sixth straight week of gains last week.

Real gross domestic product expanded at a 2% annualized rate in the first quarter, up from 0.5% in the fourth quarter of 2025. The U.S. first-quarter growth pace exceeded the reported growth rates for Canada, Japan, the United Kingdom and Germany for the same period.

Treasury yields rose over the recent period. The two-year Treasury yield is about 50 basis points higher than its level before the outbreak of the Iran conflict, and the 10-year yield is roughly 45 basis points higher.

Market measures that track expectations for Federal Reserve policy showed a lower probability of an immediate rate cut. Federal Reserve officials monitor payroll trends, unemployment, inflation readings and GDP growth when considering changes to the federal funds rate.