Wall Street capped a choppy week of trading Friday with the best day for the stock market in over two months, as traders welcomed cooler-than-expected U.S. employment data as a sign that inflationary pressures on the economy are easing.

The S&P 500 rose 1.3%, its best day since late February. The benchmark index also erased its losses for the week.

The Dow Jones Industrial Average rose 1.2%. The Nasdaq composite ended 2% higher, reflecting strong gains by technology sector stocks, which accounted for much of the rally.

The nation’s employers added 175,000 jobs last month, down sharply from the blockbuster increase of 315,000 in March, according to the Labor Department. The latest hiring tally came in well below the 233,000 gain that economists had predicted. Meanwhile, average hourly earnings, a key driver of inflation, rose less than expected.

The modest increase in hiring last month suggests the Federal Reserve’s aggressive streak of rate hikes may be finally starting to take a bigger toll on the world’s largest economy. That may help reassure the Fed that inflation will ease further, which could move the central bank closer to lowering interest rates.

“The demand for labor is slowing, which will eventually ease inflation pressures, giving the Fed some leeway to cut rates later this year,” said Jeffrey Roach, chief economist for LPL Financial. “Slower payroll growth and fewer hours worked imply the economy is slowing at a measured pace. This jobs report is consistent with the soft landing narrative.”

Treasury yields in the bond market mostly fell following the jobs report. The yield on the 10-year Treasury, which lenders use as a guide for pricing home loans, eased to 4.5% from 4.59% late Thursday. The two-year yield, which moves more closely with expectations for the Fed, fell to 4.81% from 4.88%.

The U.S. economy is in a tight spot, where the hope is that it remains strong enough to stay out of a recession but not so strong that it worsens the already stalled progress on inflation. That is essentially the “soft landing” the Fed is hoping to achieve as it tries to cool the rate of inflation to its target of 2%. Inflation at the consumer level stood at 3.5% in March, far below the peak of 9.1% nearly two years ago.

Stubbornly high readings on inflation this year pushed Federal Reserve Chair Jerome Powell to say on Wednesday that it will likely take “longer than previously expected” to get enough confidence about inflation cooling enough to warrant cut interest rates.

“Some of this data coming out of the employment report dampens that narrative a little bit,” said Charlie Ripley, senior investment strategist for Allianz Investment Management. “They want to cut interest rates, but they need more confidence in the inflation data and today’s wage data is a little bit more confidence for them.”