A volatile week behind us, the US labor market tackles challenges
Summary
- Last week saw volatility in stock markets, with Nasdaq Helsinki ending positively, while broader declines occurred in Europe and the US, driven by AI interest and US interest rate hike expectations.
- The US employment report for May exceeded expectations with 172,000 new jobs, maintaining unemployment at 4.3%, and shifting focus to potential Federal Reserve interest rate hikes.
- Sectoral job growth was notable in leisure, hospitality, and public sectors, while retail, information, and finance sectors saw job losses, contributing to a mixed labor market outlook.
- Despite strong employment data, consumer sentiment remains low due to slowed wage growth and rising energy prices, impacting household purchasing power, while corporate earnings have surged.
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Automatic translation: Originally published in Finnish 07/06/2026, 12:47 GMT. Give feedback here.
Last week was a volatile one for the stock markets: Nasdaq Helsinki managed to end the week in positive territory, but a declining week was seen more broadly in Europe and the United States. The AI theme continues to capture investors' attention. In addition, interest rate hike expectations gained momentum in the United States as employment figures surprised positively.
| Indexes | Closing price | revision 1 week | year-to-date | |
| 14167.1 | 14167,1 | 0,3 % | 14,1 % | |
| STOXX Europe 600 | 622,7 | -0,5 % | 5,2 % | |
| S&P 500 | 7383,7 | -2,6 % | 7,9 % | |
US: Unemployment rate and non-farm payrolls
Source: LSEG
The US employment report for May significantly exceeded expectations. In May, 172,000 new jobs were created, which clearly surpassed, for example, the Wall Street Journal's consensus estimate of 80,000. Unemployment remained at 4.3% as anticipated. The three-month average is now 188,000 new jobs per month, which is the strongest pace since March 2024. As the labor supply simultaneously shrinks, these figures are more than enough to turn investors' attention to Federal Reserve interest rate hikes.
However, developments in the labor market are highly divided. With the summer season and the upcoming FIFA World Cup approaching, the leisure and hospitality sector added 70,000 jobs. In the public sector, jobs increased by 55,000, which is the strongest monthly growth in over two years. Healthcare and construction also grew. In contrast, retail, information, and finance lost jobs.
Strong employment data combined with accelerating inflation led to a rise in bond yields, and the Federal Reserve is also expected to hike interest rates by the end of the year (FedWatch's probability of an interest rate hike by December is slightly over 50%). The environment of rising interest rates is particularly negative for growth stocks, and the immediate reaction in the stock market was negative: at the index level, the Dow Jones fell by over one percent, the S&P 500 by over two percent, and the Nasdaq by over four percent.
US: Wages, y-o-y revision, %
Source: LSEG
Despite strengthening employment, consumer sentiment has been subdued. In May, wage growth slowed to 3.4%, which, combined with rising energy prices, weakens household purchasing power. Consumer confidence remains at a low level, even though S&P 500 companies achieved earnings growth of 29% in the first quarter. The winners of the economic boom appear to be companies rather than households, as the share of labor income in GDP has declined in recent years.
