What a Week: Payrolls Soothe

A fight every now and then makes a relationship stronger. Arguments clear out the cobwebs and help air issues that may have been swept under the rug. But most important, the making-up can be rejuvenating.

Friday morning's payrolls report seemed like the kiss-and-make-up moment after a brief two-week spat between investors and the "Goldilocks" ecomony -- the ideal of moderate growth and low inflation.

After a volatile couple of weeks, stocks rallied and U.S. Treasury bond yields soared Friday morning. But by Friday afternoon, the relationship seemed back on slightly shaky ground.

The Dow Jones Industrial Average ended the day up only 0.1% but recaptured 1.3% on the week to close at 12,276.32. The Dow is still 4% off its Feb. 20 all-time high of 12,786.64 but is up 1.9% from its recent low of 12,050.41 March 5.

The S&P 500 finished the day up 0.1%, and up 1.1% for the week to close at 1402.85. The large-cap benchmark is down 3.9% from its high of the year but up 2.1% from its Monday low. The Nasdaq Composite ended the day down a fraction to close at 2387.55 but finished the week up 0.8%. The tech-heavy index is still down 5.4% from its Feb. 22 high of 2524.94 but is up 2% from its Monday low.

Stock and bond markets stabilized at lower prices and yields this week amid some mounting evidence that the economy is weakening. So, as Friday's payrolls report approached, investors seemed more on recession watch than inflation watch.

Traders reported expecting a payrolls print much lower than the consensus estimate for 95,000 new jobs. Some strategists were even preparing clients for the possibility of no new jobs in the month.

When the 97,000 new jobs in February and the 55,000 new jobs in upward revisions hit the tape, the news righted the ship. The report seemed to restore inflation to its rightful, more prominent place in the ladder of worries.