Markets Spooked By Strong Jobs Report?

Scott Poore, AIF^®, AWMA^®, APMA^®

June 08, 2026

Markets pulled back late last week on a stronger jobs report and the prospect of rate hikes. One would think that an improved labor market might be a good sign of the U.S. economy improving, but "investors" quickly pivoted to risk-off positions in fears that the Fed would put rate hikes back on the table. After some weakness in December of last year and February of this year, payrolls improved over the last three months, with both March & April jobs revised higher and May's report showing 87,000 more jobs than expected added last month.¹ This caused expectations of a rate hike, either in October or December to spike. The probability of an October rate hike nearly doubled and a December rate hike moved from a 60% probability to nearly a 95% probability.² This caused a shift in sentiment during Friday's trading as yields spiked and equities dropped. The shift in sentiment forced the VIX Index to spike on Friday, as well. The VIX measures futures contracts on the S&P 500 Index. When investors are fearful that the S&P will decline in price moving forward, the VIX will rise as investors buy futures on a lower S&P value. On Friday of last week, the VIX increased more than 39% in a single day. This does not happen very often, but when it does, markets tend to recover quickly. Over the past ten years, the S&P 500 Index was higher, on average, following a 30%+ VIX daily move 1 day, 1 week, and 1 month after such an event. On the 1-month basis, the S&P 500 was higher +2.66% on average and higher in 23 out of 25 instances. The only two exceptions were during the beginning of COVID in 2020. So far, in early trading this morning, equity futures look to be on the rebound. Investors should be wary of making any drastic moves in their portfolios following a one-day spike in the volatility. Most of the movement in Friday's trading can be explained by hedge funds and algorithmic traders de-risking their portfolios.³ The swift sell off started in the precious metals and bled over into equities. The options and futures markets blew through "stop" positions algorithmic traders had in place, causing a cascading effect pushing prices down further.³ The reality is that the economic picture is still solid. As noted, the labor market is improving with unemployment well below the historical average.⁴ Consumer spending, as represented by Redbook Sales, is up +9.0% year-over-year.⁵ Economic growth, as measured by GDP, continues to expand, which has pushed equity prices higher of the last few years.⁶ Until the economic backdrop worsens, investors stick to their long-term investment plans based on overall risk-tolerance.

_________________________________________________________________________________________________________________

Disclosures

The information contained herein is for informational purposes only and is developed from sources believed to be providing accurate information. The opinions expressed are those of the author, are for general information, and should not be considered a solicitation for the purchase or sale of any security. The decision to review or consider the purchase or sell of any security should not be undertaken without consideration of your personal financial information, investment objectives and risk tolerance with your financial professional.

Forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

Any market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.

Past Performance does not guarantee future results.