As stocks rallied, Wall Street’s fear gauge plummeted toward its lowest level since February 2020. The Cboe Volatility Index, or VIX, dropped below 15 from an average of 23 in the past year.

“The impressive run for equities continues to drive retail investors into the market,” said Mark Hackett, chief of investment research at Nationwide. “Investors have spent much of the past three years obsessed by the Fed, inflation, and payrolls, though volatility around those reports has settled, reflecting a less emotional market. This is bullish, as less reactivity is a sign of a healthy market.”

‘Baby Bubble’

The buzz around artificial intelligence has investors pouring a record amount of money into tech stocks, Bank of America Corp. says.

A “baby bubble” in AI was the dominant market theme in May, strategist Michael Hartnett said, with tech funds attracting an all-time high of $8.5 billion in the week through May 31, according to the bank citing EPFR Global data.

Flows into global equity funds overall hit $14.8 billion, while $1.1 billion went into bond funds, the data show.

Meantime, Wall Street’s reaction to the latest jobs report showed bets that another Fed hike is likely in the bag — but that wouldn’t necessarily happen in June.

Fed Pause

Signs of labor-market slackening in May despite a pickup in hiring could strengthen the argument from Chair Jerome Powell and other officials that they should take more time to assess incoming data and the evolving outlook before raising rates again.

Two-year yields, which are more sensitive to imminent central bank moves, jumped 14 basis points to 4.48%. Swaps are pricing almost a quarter-point hike across the next two Fed meetings. But only nine basis points are projected for June, indicating a less than 50% chance of that happening this month.

“The key question now is: can they wait until July or does this monster payrolls number trigger another burst of urgency?” said Seema Shah, chief global strategist at Principal Asset Management. “Perhaps the report details, with the unemployment rate rising and average hourly earnings growth slowing, tilts the decision to July.”

Some of the main moves in markets:

Stocks

• The S&P 500 rose 1.5% as of 1:15 p.m. New York time
• The Nasdaq 100 rose 0.8%
• The Dow Jones Industrial Average rose 2%
• The MSCI World index rose 1.5%

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%
• The euro fell 0.5% to $1.0711
• The British pound fell 0.6% to $1.2450
• The Japanese yen fell 0.8% to 139.90 per dollar

Cryptocurrencies

• Bitcoin rose 0.8% to $27,090.42
• Ether rose 1.2% to $1,891.1

Bonds

• The yield on 10-year Treasuries advanced eight basis points to 3.68%
• Germany’s 10-year yield advanced six basis points to 2.31%
• Britain’s 10-year yield advanced four basis points to 4.16%

Commodities

• West Texas Intermediate crude rose 2.2% to $71.63 a barrel
• Gold futures fell 1.4% to $1,968.40 an ounce

This story was produced with the assistance of Bloomberg Automation.