Stocks Tentatively Higher After Off-the-Mark May Jobs Report –

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Stocks added to gains on Friday on faith the Federal Reserve will move ahead with a rate hike this month even after a weaker-than-expected May jobs report. 

The S&P 500 was up 0.13%, the Dow Jones Industrial Average gained 0.16%, and the Nasdaq rose 0.46%. The three indexes touched intraday record highs shortly after the markets opened Friday.

Wall Street stepped into June with confidence on Thursday with each of the three benchmark indexes scoring new all-time highs. The S&P 500 and Nasdaq notched new intraday and closing records, while the Dow ended at its highest level ever.

The nonfarm payrolls report for May showed 135,000 jobs having been added to the U.S. economy, according to the Labor Department. Economists had expected 178,000 jobs in May. Both April and March figures were reduced: April’s was cut to 174,000 from 211,000, while March was revised to 50,000 from 79,000. 

The unemployment rate fell by 10 basis points to 4.3%, according to FactSet estimates, surprising analysts expecting the figure to hold steady. The unemployment rate fell to its lowest level since 2001. Average hourly wages increased 0.2% to $26.22, in-line with estimates. 

“Today’s jobs number is disappointing, but the overall trend is still very positive and the unemployment rate continues to decline,” said Tony Bedikian, head of global markets at Citizens Bank. “The U.S. economy is showing other signs of strength as well and the market is still forecasting that the Fed will raise rates later this month.”

But a disappointing headline number for May and downward revisions for March and April likely won’t derail the Fed’s expected plans for June. The chances of a 25-basis-point increase to the federal funds rate when the FOMC meets in June held at 90%, according to CME Group fed funds futures. The Federal Open Market Committee, the decision-making arm of the Fed, is next set to meet June 13-14.