Wall Street stocks rose on Friday after the latest monthly jobs report pointed to strength in the U.S. economy and geopolitical tensions eased. Technology stocks led the rally, with gains in heavyweight companies such as Apple, Microsoft and Alphabet lifting the S&P 500 tech index to a record high.

According to the Labor Department, May saw the economy add 223,000 nonfarm jobs and average hourly wages increased 0.3 percent, both topping economist estimates. The unemployment rate fell to an 18-year low of 3.8 percent. Data on construction spending and industrial production also pointed to accelerating economic growth.

Markets got a reprieve as Italy installed a coalition government, removing the risk of a repeat vote dominated by debate on whether the country would quit the euro. Further calming geopolitical concerns, U.S. President Donald Trump announced the resumption of plans for a summit with North Korea’s leader Kim Jong Un on June 12.

The Cboe Volatility index ended down at 13.46, its lowest closing level in a week.

For the week, the S&P rose 0.48 percent, the Dow lost 0.48 percent, and the Nasdaq gained 1.62 percent.

However, the Street is watching trade developments after Washington imposed steel and aluminum tariffs on imports from Canada, Mexico and the European Union. Canada and Mexico retaliated, targeting U.S. steel and aluminum imports and products such as whiskey and blue jeans.

Tech stocks, which led gains on Friday, may be somewhat insulated from those trade risks. The Nasdaq was just over 1 percent away from a record high as tech stocks largely cushioned the index in the past week even while the broader markets suffered. By comparison, the S&P 500 was 4.8 percent off its Jan. 26 peak.

Approximately 7.04 billion shares changed hands on the major equity exchanges, as compared to the 6.61 billion share average over the past 20 trading days.

Jobs Number Exceeds Expectations

According to a report released by the Labor Department on Friday morning, job growth accelerated in May and the unemployment rate dropped to an 18-year low of 3.8 percent, pointing to rapidly tightening labor market conditions, which could stir concerns about inflation.

The closely watched report also indicated that wages were rising solidly, cementing expectations that the Federal Reserve will raise interest rates this month and raising the probability of two more hikes later in the year. It also renewed fears about the economy overheating.

Nonfarm payrolls increased by 223,000 jobs last month as warm weather aided hiring at construction sites. There were also large gains in retail and leisure and hospitality payrolls. The economy created 15,000 more jobs than previously reported in March and April.

Last month’s one-tenth of a percentage point drop in the unemployment rate pushed it to a level last seen in April 2000. The jobless rate is now where the Fed forecast it would be by the end of this year.

Average hourly earnings rose eight cents, or 0.3 percent last month after edging up 0.1 percent in April. That pushed the annual increase in average hourly earnings to 2.7 percent from 2.6 percent in April.

The strong employment report added to a string of upbeat economic data, including consumer spending, industrial production and construction spending, that have suggested economic growth was regaining speed early in the second quarter after expanding at a moderate 2.2 percent annualized rate in the January-March period.

The Atlanta Fed is forecasting gross domestic product rising at a 4.8 percent pace in the second quarter. The strength comes even as the stimulus from a $1.5 trillion income tax cut package and increased government spending is yet to be felt.

But there are dark clouds on the horizon. A decision this week by the Trump administration to impose tariffs on steel and aluminum imports from Canada, Mexico and the European Union has renewed fears of a trade war, causing financial market volatility. Trouble has also been brewing in Europe.

The political tensions in Europe and a protectionist domestic trade policy could dissuade the Fed from taking a more hawkish stance when policymakers meet on June 12-13. Traders, however, raised bets for four rate hikes this year.

Monthly job gains have averaged about 179,000 over the last three months, more than the roughly 120,000 needed to keep up with growth in the working-age population. Though the labor market is viewed as being close to or at full employment, there is still some slack remaining.

The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, fell to 62.7 percent last month from 62.8 percent in April. It has declined for three straight months.

At the same time, the labor market is getting tighter. A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, fell to 7.6 percent last month, the lowest since May 2001, from 7.8 percent in April.

With job growth expected to slow as employers struggle to find qualified workers, economists expect wage growth will pick up significantly. There is growing anecdotal evidence of worker scarcity.

A report from the Fed this week showed shortages of truck drivers, sales personnel, carpenters, electricians, painters, and information technology professionals.

Job gains in May were across all sectors. Construction payrolls increased by 25,000 after rising by 21,000 jobs in April.

A separate report from the Commerce Department on Friday indicated that construction spending rose sharply during April.

Manufacturers added another 18,000 jobs last month on top of the 25,000 created in April. Further gains are likely, with a survey from the Institute for Supply Management on Friday showing a pickup in factory activity in May.

The survey suggested manufacturers, especially in the food, beverage and tobacco product industries, were starting to run into labor supply issues. There were also complaints about soaring prices, partially brought about by the steel tariffs.

Government payrolls increased by 5,000 in May, reversing April’s 3,000 drop. Retailers boosted employment by 31,100 jobs last month. Employment in the leisure and hospitality sector increased by 21,000 jobs.