(Reuters) -U.S. job growth slowed marginally in April, but the outlook for the labor market is increasingly darkening as President Donald Trump's aggressive tariff policy heightens economic uncertainty.

Nonfarm payrolls increased by 177,000 jobs last month after rising by a downwardly revised 185,000 in March, the Labor Department said on Friday.

Economists polled by Reuters had forecast 130,000 jobs added last month after a previously reported 228,000 advance in March.

The unemployment rate held steady at 4.2%. It is too early for the labor market to show the impact of Trump's on-and-off again tariffs policy. Amid the uncertainty, the Federal Reserve is expected to keep benchmark interest rates in the 4.25%-4.50% range next week. Economists expect companies will reduce hours before resorting to mass layoffs.

MARKET REACTION:

STOCKS: S&P 500 E-minis added to gains and were up 0.85%, pointing to a solid open on Wall Street

BONDS: The yield on benchmark U.S. 10-year notesrose to 3.2676%, the two-year note yield rose to 3.744%FOREX: The dollar index pared a loss and was 0.30% lower, while the euro extended 0.27% higher

COMMENTS:

MARK MALEK, CHIEF INVESTMENT OFFICER, SIEBERT NXT, NEW YORK

"We are expecting a slow decline in a non-farm payroll growth and while it's not positive by any means it's better than could've been expected. I think there were whisper numbers around there that were significantly less and I think people were somewhat braced for a bigger potential drop. The unemployment rate remains the same that was pretty positive."

ROBERT PAVLIK, SENIOR PORTFOLIO MANAGER, DAKOTA WEALTH, FAIRFIELD, CONNECTICUT

"The economy isn't collapsing as people were worried about. We came in better than expected, both on the nonfarm payrolls report itself, but then it didn't show any real increase to average hourly earnings and so that came in a little bit lighter than expected. So that takes the concerns of wage pressures a little bit out of the picture."

"The market likes the news. There'll be some out there that will point to a lagging indicator the fact that the Liberation Day sort of came and didn't necessarily get completely factored into non farm payrolls. But I really wouldn't worry too much about that yet. I would focus more on the positive aspect of this report -- the positivity that the US economy is continuing to move forward and still healthy enough, not gangbusters, but still healthy enough."

MARK MALEK, CHIEF INVESTMENT OFFICER, SIEBERT NXT, NEW YORK

"The numbers are holding up: so obviously the survey was worth for 138,000 and we came in slightly higher but last month was revised significantly downward. I think it just reflects what the consensus is expecting. We are expecting a slow decline in a non-farm payroll growth and while it's not positive by any means it's better than could've been expected. I think there were whisper numbers around there that were significantly less and I think people were somewhat braced for a bigger potential drop. The unemployment rate remains the same that was pretty positive."

SAMEER SAMANA, HEAD OF GLOBAL EQUITIES AND REAL ASSETS, WELLS FARGO INVESTMENT INSTITUTE, CHARLOTTE, NORTH CAROLINA

"We've reached a steady state for the labor market. We went from too hot to kind of just right in terms of job growth, in terms of wage growth, in terms of the unemployment rate. So again until something more meaningful changes with respect to the supply or demand for labor it's fair to say that it's going to just keep chugging along."

"Probably the big risk to the downside is that trade tensions flare up again. At least right now with the 90-day delay there's still some hope that things get worked out."

"Consumers are still spending and that's driving continued job growth. The number was better than expected for this time, but it was revised lower for last time so if you take the two of them together its basically kind of right in line. So, the labor market is almost acting exactly as expected. It's just settling into normal."

"If anything, it probably reinforces the Fed's stance of being on hold for longer because continued steadiness in the labor market is what they're pointing to as the reason why it might take them some time to cut."

CHRIS ZACCARELLI, CHIEF INVESTMENT OFFICER FOR NORTHLIGHT ASSET MANAGEMENT IN CHARLOTTE (by email)

"Markets breathed a sigh of relief this morning as the jobs data came in better than expected. While recession fears are still simmering on the back burner, the buy-the-dip dynamic can continue - at least until the tariff pause runs out. We've already seen how financial markets will react if the administration moves forward with their initial tariff plan, so unless they take a different tack in July when the 90-day pause expires, we will see market action similar to the first week of April.

"If adjustments can be made and the new approach is more nuanced, with exemptions for activity that leads to the administration's ultimate goals and more reasonable tariff levels, then the real economy can re-adjust and markets will take it in stride, however, we aren't out of the woods yet, because it's unclear how much different the US trade approach will be in the second half of 2025 versus what we've seen year-to-date."

MELISSA BROWN, MANAGING DIRECTOR OF INVESTMENT DECISION RESEARCH, SIMCORP, NEW YORK

" This is good employment data which suggests that the economy remains strong. The one thing it suggests is that, even though everybody has been so worried about stagflation, maybe we managed to continue to grow without growing so much that we ignite inflation.

I don't know if this is necessarily going to change anything (interest rate cut bets) because we're still looking at a strong economy at least for now. We could see these numbers go down as the impact of tariffs really starts to make its way through the economy, but it's not there yet."

PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK

"This trend remains positive. Basically, (this report) indicates you know that the labor market is stable for now."

"(March's downward revision) makes this report even stronger."

"Hourly wages are positive, you know, and that gives the Fed more time to assess the inflationary impact of tariffs."

"The participation rate ticking up is probably not significant and probably due to the fact that total unemployment is still at 4.2%."

"The bottom line is this was stronger than we expected and that it probably means that the economy is still not in recession."

"The takeaway is this report supports the Fed staying on course at the next week's meeting and the Fed will likely continue to stay on hold."

"So that puts the June meeting in question again."

BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN

"Employment is holding in there, but manufacturing is feeling the pinch. The diffusion index for manufacturing - related to how many industries are growing versus shrinking - has dropped to 42. It's back to the muddy recessionary conditions for manufacturing. In April there was a big jump in hours worked in retail and transportation as people made their last ditch efforts to buy goods before prices adjusted."

LINDSAY ROSNER, HEAD OF MULTI SECTOR FIXED INCOME INVESTING, GOLDMAN SACHS ASSET MANAGEMENT (emailed comments)

"Strong jobs data puts a spring in the Fed's step. Despite an increasingly uncertain economic backdrop, the US labor market remained resilient in April with employment surprising to the upside and the unemployment rate remaining steady. In the here and now, solid labor market data provides the Fed with scope for patience. With the forward-looking outlook having deteriorated, however, today's data feels somewhat backward looking and the risks remain that a weakening economy could see the Fed resume its easing cycle later in the year."

(Compiled by the Global Finance & Markets Breaking News team)