Here’s how Wall Street reacted to the latest NFP data

Investing.com -- March’s nonfarm payrolls report showed stronger-than-expected job growth, but analysts say its relevance is already fading due to escalating trade tensions. Here’s how Wall Street reacted.

William Blair noted that the 228,000 job increase was a sign of economic strength but said the market’s focus had already shifted. "Today’s surprisingly strong labor market data is encouraging as it suggests the economy is going to be hit with the tariff shock starting from a position of strength," the firm said. 

However, it cautioned that the market "is already looking straight past this backward-looking report in anticipation of what might happen next as a result of the tariff shock."

Wells Fargo (NYSE:WFC) described the report as "solid but unspectacular," emphasizing that the "sharp escalation in trade tensions this week have fundamentally altered the economic outlook." The firm now sees "risks skewed toward more easing" in its forecast for three Fed rate cuts this year.

Jefferies compared the situation to early 2020, noting that even a strong payrolls number may not prevent a hiring slowdown. "We do not think that the tariff impact will be anything close to the pandemic shutdown, but at a minimum, we expect that hiring will likely be on pause for a time as businesses pivot to strategies aiming to offset the impact of tariffs."

Morgan Stanley (NYSE:MS) said the report "should reduce fears of a sharp slowdown preceding the current policy turmoil." The firm sees this strength as supporting the Fed’s stance to hold policy steady for now.

UBS acknowledged the strong payroll growth but warned that the trade situation had created "material downside risks to the outlook." The firm noted that "the scale of trade policy changes proposed this week has added material downside risks to the outlook that we expect may call into question the viability of the economic expansion itself."

Evercore ISI said the “payroll employment growth (even with revisions) was acceptable as it was better than whisper fears and consensus estimates.”