Blowout Payrolls and Iran Diplomacy Lift Risk, Sink Oil

US equities closed modestly higher Friday as a stronger-than-expected April jobs report and a fresh Iranian peace overture to mediators combined to lift sentiment, with tech leading gains. The S&P 500 ETF (SPY) added 0.37% to $737.62 while the Nasdaq proxy (QQQ) surged 1.62% to $711.23, reflecting a rotation into rate-sensitive growth names after soft wage data tempered fears of an imminent Fed hike. The 10-year Treasury yield slipped 0.18% to 4.364%, and the dollar index fell 0.42% to 97.84 — a notable softening given the headline payroll beat.

April nonfarm payrolls came in at +115,000, nearly double the Dow Jones consensus of ~55,000 and well above the broader market expectation of 62–65K, marking back-to-back monthly gains for the first time in nearly a year. The details were far less bullish: average hourly earnings rose just 0.2% MoM and 3.6% YoY, both below forecasts of 0.3% and 3.8%, and the U-6 underemployment rate climbed to 8.2%. Federal government shed another 9,000 jobs and the information sector lost 13,000, while prior months saw a net negative revision of 16,000. Chicago Fed President Austan Goolsbee, appearing post-report, underscored the stagflationary read — inflation above the 2% target for five years, trending higher for three months, with the Fed holding at 3.50%–3.75% after an 8-4 vote at the April 29 FOMC meeting that produced the most dissents since 1992.

The dominant cross-asset move of the session was a sharp decline in crude: WTI fell 2.88% to $95.42 and Brent settled at $108.17 after Iran transmitted an updated peace proposal to Pakistani mediators, fanning hopes of a settlement following President Trump's May 6 pause of the US Navy escort mission. Despite the daily drop, both benchmarks remain roughly 78% above their 2026 starting levels following the February 28 US-Israel strikes that triggered the Strait of Hormuz crisis — what the IEA called the largest supply disruption in the history of the global oil market. The Reserve Bank of Australia separately hiked 25 basis points to 4.35% for a third consecutive meeting, citing Middle East-driven inflation with Australian CPI at 4.6%, a signal that energy-linked tightening cycles remain live outside the US. Gold (GLD) was essentially flat at $433.77, with safe-haven demand offset by the diplomatic relief.

Markets enter next week navigating several unresolved fault lines: the legal status of the administration's tariff architecture after the Court of International Trade's May 7 ruling that Section 122 global tariffs are unlawful — though relief is currently limited to named plaintiffs — continues to cloud trade policy durability. Senate confirmation proceedings for incoming Fed Chair Kevin Warsh will command attention as Powell's tenure closes, with investors parsing Warsh's inflation tolerance and institutional posture toward the four dissenting FOMC voices. Any fresh signals from Hormuz Strait diplomacy or a breakdown in Iran talks could rapidly reverse Friday's crude relief, and next week's US CPI print will be the critical test of whether the stagflationary narrative firms enough to force the Fed's hand on hikes.