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May jobs report, debt ceiling debacle ends, Lululemon earnings: Top stories

Yahoo Finance

Friday's thee stories to watch: The May jobs report was surprising, with both payrolls and the unemployment rate coming in higher than expected. The bill to raise the debt ceiling goes to President Biden's desk, ending the weekslong saga over whether the U.S. would default. Lululemon shares are set to open higher after its first quarter results topped analyst estimates.

Video transcript

JULIE HYMAN: Welcome to "Yahoo Finance Live." I'm Julie Hyman with Brad Smith. And here are three things you need to know this morning. May payrolls coming in hotter than expected at 339,000, far exceeding expectations and leading to more questions over the Fed's move at this month's policy meeting.

The data-dependent FOMC will be looking at the resilience of the labor market amid a swirl of economic headwinds. This week's data continues to reinforce the notion of a two-speed economy. Private payrolls also far exceeded expectations while ISM data showed a seventh month of shrinking factory activity.

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Investors can at least take a calamitous default off the table after the senate passed the US debt ceiling bill. The vote survived a revolt from senators concerned the package would underfund the Pentagon. It now heads to President Biden. The removal of that obstacle puts the market's focus squarely back on monetary policy.

Yesterday we saw bets flip from largely expecting a quarter point hike to strongly expecting the FOMC to hold fire. And that remains the case pretty much this morning. Inflation data hits the day the FOMC meets, making June 13 and 14 key dates on the calendar.

And Lululemon shares surging after recent guidance on strong sales and a robust international performance. No sign of a discretionary spending slowdown here, and the business sees affluent customers continuing to spend on yoga pants and belt bags. And it's also seeing that in the world's second biggest economy, revenue in China jumping almost 80% from a year earlier.

Back then, of course, it was still in COVID lockdown mode, so there is a stark comparison here. The outlook from Lululemon is solid. The athleisure retailer now expects second quarter sales growth of around 15%.