US Labor Market Heats Up In March: Payrolls Grow By 303,000, Highest In 10 Months, Dampen June Rate Cut Hopes (UPDATED)

Editor’s note: This story has been updated with additional details.

The pace of expansion in the U.S. labor market exceeded forecasts last month, dampening investor hopes for potential interest rate cuts by the Federal Reserve.

U.S. employers added 303,000 nonfarm payrolls in March, marking an increase from the 270,000 reading in February and surpassing the expected 212,000, the Bureau of Labor Statistics said Friday.

March’s Jobs Report: Key Highlights

• Monthly nonfarm payrolls grew by 303,000, representing an increase of 33,000 from the previous month and marking the highest figure since May 2023. This topped economist expectations for an increase of 212,000.
• The unemployment rate slowed from 3.9% to 3.8%, easing more than expected.
• Average hourly earnings eased from 4.3% to 4.1%, in line with predictions.
• On a monthly basis, pay growth accelerated from the upwardly revised 0.2% to 0.3%, matching expectations.

Market Reactions

The unexpectedly strong jobs report intensified dwindling expectations for Federal Reserve rate cuts, a sentiment already weakened by hawkish remarks from Fed speakers on Thursday.

Market-implied probabilities assigned a 64% chance of a rate cut by June, prior to the jobs report, and fell to 53% following the robust employment reading.

The U.S. dollar index (DXY), as tracked by the Invesco DB USD Index Bullish Fund ETF UUP, rose 0.4% minutes after the release, and Treasury yields moved higher.

Futures on U.S. major averages trended higher during premarket trading on Friday following a negative session on Thursday.

Contracts on the S&P 500 were 0.4% higher at 8:55 a.m., while Nasdaq 100 futures rose 0.5%.

The tech-heavy Invesco QQQ Trust QQQ closed 1.5% a day earlier, marking the worst-performing day since late January.

As Treasury yields sharply rose, bond-related ETFs tanked with the iShares 20+ Year Treasury Bond ETF TLT down 1.3%.

A stronger dollar and higher yields also exerted pressure on precious metals. Gold eased 0.1%, while silver plummeted 1.6%

Friday’s Premarket Stock Movers

Below is a list of mega-cap stocks – with a market cap above $100 billion – showing heightened price action following the March jobs report, as observed on the Benzinga Pro platform.

• Lowe’s Companies Inc. LOW, up 0.8%
• Caterpillar Inc. CAT, up 0.6%
• Mastercard Inc. MA up 0.6%
• Booking Holdings Inc. BKNG up 0.6%
• Adobe Inc. ADBE up 0.5%

• Tesla Inc. TSLA down 0.5%
• The Progressive Corp. PGR down 0.6%
• McDonald’s Corp. MCD down 0.7%
• AstraZeneca plc AZN, down 0.8%
• Toronto-Dominion Bank TD down 1.4%.

Read now: Hawkish Fed Voices Lead To Market Slide: ‘It’s Possible Fed Won’t Cut This Year If Inflation Stalls’ (CORRECTED)

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