NEW YORK, RAW – The S&P 500 has risen modestly to kick off the second quarter, as the monthly jobs report indicated a strong labour market and is likely to keep the Federal Reserve on track to maintain its hawkish policy stance.

The Labor Department’s employment report shows a rapid hiring pace by employers while wages continue to climb, although not enough to keep pace with inflation.

US employers added 431,000 jobs in March, which was shy of the 490,000 estimate but still showed strong job gains. The unemployment rate dropped to 3.6 per cent, a new two-year low while average hourly earnings rose 5.6 per cent on a year-over-year basis.

Friday’s report heightened expectations that the central bank is likely to become more aggressive in raising interest rates as it seeks to curb inflation as it unwinds its easy monetary policy.

“Job gains were broad, more people are going back to the office,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments in Menomonee Falls, Wisconsin.

“If other data between now and the next Fed meeting stay this rosy, the Fed will likely feel comfortable hiking by 50 basis points and announcing an aggressive rundown of its balance sheet.”

The Dow Jones Industrial Average rose 139.92 points, or 0.4 per cent, to 34,818.27, the S&P 500 gained 15.45 points, or 0.34 per cent, to 4,545.86 and the Nasdaq Composite added 40.98 points, or 0.29 per cent, to 14,261.50.

The defensive real estate, utilities and consumer staples were the best-performing sectors on the day, with each rising more than one per cent.

For the week, the Dow slipped 0.1 per cent, the S&P edged up 0.1 per cent and the Nasdaq advanced 0.7 per cent.

Expectations for a 50-basis point interest rate hike at the central bank’s May meeting stand at 73.3 per cent, according to CME’s FedWatch Tool At its March meeting, the Fed raised rates by 25 basis 25 basis points, its first hike since 2018, and central bank policymakers have indicated they are prepared for bigger rate hikes.

Other data on Friday showed US manufacturing activity unexpectedly slowed in March, although it remained firmly in expansion territory, as tight supply chains continued to put pressure on input prices.

After the payrolls report, US Treasury yields jumped and a closely watched part of the yield curve between two-year and 10-year notes, seen by many as a reliable indicator of a recession, inverted for the third time this week.

The S&P 500 ended the first quarter on Thursday with its biggest quarterly decline since the COVID-19 pandemic in the US was reaching full swing on concerns about rising prices, the war in Ukraine and the Fed’s response on economic growth.

Video game retailer GameStop Corp, part of the “meme stock” trading frenzy last year, gave up early gains and was last down after announcing a plan to seek shareholder approval for a stock split.

Apple Inc fell after JP Morgan removed the stock from its analyst “focus list” along with Qualcomm, which slumped.