Equities rallied Friday on upbeat US employment figures and final congressional passage of the debt ceiling package. The Dow industrials rose 2.1 percent, the S&P 500 gained 1.5 percent, and the Nasdaq was up 1.1 percent. US Treasury yields, oil prices, and the dollar all rose.

A surprisingly strong rise in US payrolls and lower than expected average earnings generated a risk-on reaction following other supportive data releases this week. Many investors saw a goldilocks scenario emerging, with a softer than expected landing and slowing inflation. Investors moved money into equities in response to the latest data and on relief that the US dodged the debt default scenario.

The market also evidently judged that the payrolls data will not raise pressure on the Federal Reserve to raise rates in June, as futures still implied a 70 percent likelihood of no Fed action in June, though a higher likelihood of a subsequent rate hike.

Equities were strong across the board, with best sectors including energy, financials, materials, consumer discretionary, consumer staples, and health care.

Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.

Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.