Payroll Beat Sends Stocks to Fresh Records for The Fourth Consecutive Session: May 8, 2026

A stronger-than-expected jobs report is strengthening confidence that the economic cycle remains on solid footing even as risks associated with the Middle East cloud the outlook. Investors are looking beyond potential future cyclical weakness by piling into tech stocks at an unprecedented pace, believing that those names are less sensitive to changes in rates or activity. Indeed, a weaker-than-projected all-time low consumer sentiment print this morning  couldn’t stand in the way of the bulls as subdued wage pressures and lightening inflation expectations pushed the greenback and yields throughout the curve lower. Meanwhile, US-Iran tensions are ongoing, as several attacks have been reported this week along the Strait of Hormuz, occurring as Washington is waiting to see if Tehran will accept the White House’s peace deal and that’s keeping WTI crude oil around $96 per barrel. Still, the Nasdaq 100 and S&P 500 benchmarks have reached fresh records for the fourth consecutive session although just five of the six major sectors are participating in the advance. Elsewhere, the commodity complex is appreciating across the board, cryptocurrencies and volatility protection instruments are near their flatlines and prediction markets are catching bids.

Broad Growth in Payrolls

The US added 115k jobs last month in broad-based fashion as employers maintained their hiring appetites despite risks to the economic outlook. The headline figure beat the 62k median estimate although it slowed from 185k in March. The private education/health services sector led the advance as expected, with a bump of 46k, however the cyclical areas participated too with the following gains:

• Transportation/warehousing, 30.3k

• Retail, 21.8k

• Leisure/hospitality, growing rosters by 14k.

Other services, construction, wholesale trade, professional/business services, utilities and mining raised worker totals by 10k or less. Conversely, information, financial activities, government and manufacturing shed 13k, 11k, 8k and 2k.

Unemployment Rate Is Unchanged, Pay Hikes Miss Expectations 

In other positive news, the unemployment rate remained steady at 4.3%, as expected, while average hourly earnings expanded 0.2% month over month (m/m) and 3.6% year over year (y/y), lighter than the 0.3% and 3.8% projected and compare to the previous period’s 0.2% and 3.4%. The labor force shrunk marginally to 170k and took the participation rate down to 61.8%, the lowest level since October 2021. The average hourly work week did expand to 34.3, however, which was higher than the forecast for an unchanged 34.2.

But Consumer Sentiment Hits Record Low

The University of Michigan’s Consumer Sentiment Index fell to a fresh record low this month, as elevated prices and declines in buying intentions for big-ticket items weighed on results. Additionally, households pointed to high gasoline costs and tariffs as headwinds. The 48.2 print came in beneath the 49.5 estimate and April’s 49.8, as the sub-index for current conditions sank from 52.5 to 47.8. The benchmark for the future outlook was an outlier, climbing from 48.1 to 48.5, however. Inflation expectations declined over both the 1- and 5-year periods to 4.5% and 3.4% from 4.7% and 3.5%.

Strong Hiring Have Investors Enjoying Terrific Rally

Stocks were already climbing strongly before the bell rang but the robust jobs picture really added fuel to the fire of the current tech rally. Investors are adding exposures to AI-related equities rapidly as those shares are seen as being less vulnerable to a shifting economic outlook. Meanwhile, prospects for weaker growth, accelerating inflation and mounting geopolitical tensions are not issues for the ferocious advance, although they may catch up to Wall Street, somewhere along the line. For now, however, market participants can enjoy terrific, outsized year-to-date returns of roughly 15% for the Nasdaq 100 and 8% for the S&P 500.

International Roundup

Canada Labor Market Appears Stable

Canada’s labor market last month was stable relative to March and the year ago period although an additional 51k individuals sought work, which pushed the unemployment rate up by 0.2 percentage points to 6.9%, according to Statistics Canada. The unemployment rate matched the year-ago level but surpassed the economist consensus estimate of 6.7%. Meanwhile, the total number of full-time workers fell by 47k or 0.3%, and the number of part-timers inched up by 29,000, or 0.8%. In March, the number of full-time workers slipped by 1.1k while part-timers increased by 15.2k. April’s m/m jobs losses included a 25k drop in information, culture and recreation, a 16k contraction in construction and a 13,000 slip in the other services sector, which includes repair and maintenance along with personal services. Conversely, the business, building and other support services category added 22,000 workers while in the health care and social assistance sector an additional 18,000 individuals started punching time clocks. The accommodation and food services group, furthermore, added 13,000 workers. While the number of employed individuals sank by 112,000 year to date, total April payrolls were 0.3% higher than in the year-ago period. Regarding compensation, average hourly wages were 4.5% higher than in April 2025 following y/y growth of 4.7% in March.

UK House Price Down for Second Straight Month

House prices in the UK dropped 0.1% m/m in April following the 0.5% decline in March as growing uncertainty regarding the US-Iran war weighed on buyer demand, according to the Halifax House Price Index. A consensus of economists forecasted no change in prices during April. On a y/y basis, the average house price of £299,313, or $407,84, was 0.4%. Halifax believes higher energy prices resulting from the war have caused potential home buyers to anticipate both stronger inflation in the coming months and a continuation of rising borrowing costs. As cost-of-living concerns have become front of mind, home shoppers are becoming more cautious. Despite those challenges, Halifax believes the house market is fairly stable.

Wage Increase Strengthens Case for BoJ Rate Hike

Real wages in Japan climbed slightly more than 1% y/y in March, marking the third consecutive month in which the metric, which includes the impact of inflation, has risen. In March, nominal wages were up 2.7% while the Consumer Price Index depicted a 1.6% inflation rate, although Japan has provided subsidies to offset the impact of surging oil prices and higher costs of imports due to a weak yen. The BoJ has previously stated it will raise its key interest rate if wages and prices demonstrate steady growth. Against that backdrop, nearly two-thirds of economists surveyed by Reuters believe the BoJ will raise its key interest to 1% when it meets June 15-16. Also in March, overtime pay increased by 1.9% although one-time bonuses were down 1.5% following the 7.5% hike in February.