The big story in the markets Friday has been all about jobs.
April's job report showed the U.S. unemployment rate dropped to 6.3 percent as the economy added 288,000 jobs, the biggest increase since January 2012. Sounds great, but the labor force participation is at a 35-year low as the labor force itself dropped by 806,000 people.
Still, the fact that non-farm payrolls were much higher than expected was a pleasant surprise given the lower-than-expected first-quarter GDP number earlier in the week.
The market's reaction to all this to all this has been to go… flat. Stocks barely moved Friday, in part because of continued tensions in Ukraine. That's affecting both stocks and bonds, according to portfolio manager Chad Morganlander of Stifel's Washington Crossing Advisors.
"You have short-term geopolitical concerns that are holding back the equity markets as well as the bond market," Morganlander said. "If we didn't have the Russian drama currently going on, then the long-end of the yield curve would probably be reaching around 2.90 or 3 percent."
Flight-to-safety bond-buying led the U.S. 10-year Treasury Note yield to fall to 2.575 percent at one point on Friday, its lowest level since February 3.
Despite the market's near-term concerns, Morganlander believes the economy will ultimately end the year up in the 3 percent range.
"As the temper heats up, so will the economy," Morganlander said. "We believe that earnings as well as the total overall market will be in the plus column. In regards to the total return, we're thinking about 6 to 8 percent on the S&P 500. But, today, it's just about short-term outlook and it's all the geopolitical overhang that's causing concern."
Investors would be best served by not selling in May, according to Morganlander.
"I would say that would be bad advice," Morganlander said. "You're starting to see a string of good economic numbers. In fact, I believe that over the coming couple of months, you're going to start to see the housing market click in as well. That's going to bode well for the overall markets. You just need to get through this geopolitical concern."
Ari Wald, head of technical analysis at Oppenheimer & Co., said the market is not at a cyclical top and agrees with Morganlander's general bullishness.
"I see a long-term trend that's still pointing higher," Wald said. He thinks the 200-day moving average for the S&P 500 will continue rising, though not necessarily smoothly. "In the near term, we are up against some resistance at the prior peaks at around 1,900. I don't think this is indication to sell, but maybe an indication to stop buying."
Wald believes pessimists have been repeatedly wrong in trying to call the market top. With "every little pullback in the stock market," said Wald, "people want to say that is the end of the cycle, that this is going to be the start of a very larger, much bigger decline. And, I think as people continue to say that, the market's going to keep on moving higher."
To see the full discussion on the S&P 500, with Morganlander on the fundamentals and Wald on the technicals, watch the above video.