Stocks rise after worst quarter since the pandemic; jobs report on tap

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The second quarter is kicking off with the closely-watched jobs report and strong numbers could give the Fed more impetus to continue on a rate hike cycle that it hopes will cool inflation. Non-farm payrolls are expected to show 490,000 jobs were added in March, following a 678,000 gain in February. The unemployment rate is expected to fall to 3.7% from 3.8%, while wages are forecast to rise 0.4% M/M and 5.5% Y/Y (from 0.0% and 5.1%).

Snapshot: Positive jobs growth in March would mark the fourteenth consecutive month of expansion for the U.S. workforce and would bring the level of employed Americans closer to pre-pandemic levels. Non-farm employment is now only down by about 2M payrolls, or 1.4%, compared to its 152M level notched in February 2020. At the height of the COVID employment crisis in April that year, non-farm payrolls slumped to 130M nationwide.

"Transportation still seems to be pretty hot, certainly the hospitality sector but over the last couple of months, it's been pretty widespread. We're seeing jobs gains across most of the jobs sectors," explained Marvin Loh, senior global macro strategist at State Street. "I would look at retail because when you get these higher gas prices it's the consumption categories that get hit first."

Market reaction: Futures linked to the major indices are around 0.5% higher Friday morning after closing out their worst quarter in two years. The Dow and S&P 500 fell 4.6% and 4.9% during Q1, while the Nasdaq slumped more than 9%. There's been somewhat of a rally in recent weeks, but fears of inflation, inverted yield curves, oil prices and the war in Ukraine continue to rattle investors.