New York CNN Business  — 

Investors breathed a huge sigh of relief following the May jobs report Friday. Stocks rallied as the numbers told a classic Goldilocksian, not too hot or too cold, story about the state of the economy.

The Dow gained 180 points, or 0.5%, and is now only about 1% off its all-time high. The S&P 500 rose 0.9% to finish just below its record and the tech-heavy Nasdaq surged about 1.5%. All three indexes finished up slightly for the week as well.

Bond yields also edged lower and the dollar weakened — signs that investors aren’t too concerned about the economy overheating.

“There was a little bit of something for everyone in this report,” said Yung-Yu Ma, chief investment strategist with BMO Wealth Management. “It’s still indicative of a job market that’s growing strongly but not so strong that it’s raising concerns the Federal Reserve is going to have to pull back on stimulus.”

Fewer jobs were added than expected last month, but the numbers were stronger than April’s surprisingly weak gain.

Odeta Kushi, deputy chief economist with First American Financial, called the report “middle-of-the-road,” adding that her “initial reaction to the jobs numbers were that they weren’t great. But they weren’t terrible.”

What’s more, the unemployment rate continued to edge lower and wages rose again, although not at a dramatic enough rate to make investors nervous about inflation.

“This is not a game-changer for the Fed,” said Michael Rosen, managing partner and chief investment officer with Angeles Wealth.

Rosen added that the jobs data also show that the economy is continuing to rebound at a solid clip, which will allay fears that consumer spending could cool now that the third round of stimulus checks from Washington is starting to wind down.

Inflation still just temporary?

Other experts added that Friday’s jobs numbers will give Fed chair Jerome Powell more evidence to sustain his longstanding argument that inflation is a “transitory” phenomenon.

Along those lines, investors are pricing in a 7% chance of a rate hike by the end of 2021, according to fed funds futures contracts trading on the CME’s FedWatch Tool. That’s down from a 14% probability of a rate hike just a month ago.

“I am vigorously clinging on to the hypothesis that higher prices are all temporary,” said Nathan Sheets, chief economist at PGIM Fixed Income, who believes inflation will retreat to “a more normal 2% rate” by the end of 2022.

Sheets added that prices have mainly been going up due to well-publicized labor shortages and supply constraints. He expects those pressures to abate as the economy returns to normal.

Stocks on the move

Tesla (TSLA) shares gained nearly 5% after Elon Musk wrote a series of cryptic tweets in which he appeared to bash bitcoin and other cryptocurrencies.

Bitcoin (XBT) fell Friday on the “news,” while the prices of ethereum, binance, XRP and even Musk’s beloved dogecoin sank too.

Meme stock AMC (AMC) was lower Friday in a volatile day of trading following a big slide Thursday. Other stocks that have been touted by fans on Reddit were in the red, including BlackBerry. GameStop (GME) and Bed Bath & Beyond (BBBY).