What happened

The stock market rocketed higher on Friday, thanks to a jobs report that was much better than expected, and renewed hope that a trade deal with China is coming in the not-too-distant future. As of 3:30 p.m. EST, the Dow Jones Industrial Average and the S&P 500 were both up by 3.2%.

Payment processors performed even better. Mastercard (NYSE:MA), Visa (NYSE:V), American Express (NYSE:AXP), and Discover Financial Services (NYSE:DFS) were all up by over 4%.

Person holding a credit card while shopping on a laptop

Image source: Getty Images.

So what

While none of these companies have much exposure to China, they are all rather recession-prone businesses. So, they are understandably reacting quite positively to any signs that a recession is not likely in the near future.

For example, all four companies earn "swipe fees" -- that is, a percentage of the transaction amount when a merchant accepts a card payment. In tough economic times, consumers swipe their cards less.

American Express and Discover are the best performers of the group, and have also been the worst performers in the recent market correction. There's a good reason for this. Unlike Visa and Mastercard, each of these two companies also functions as the lender. And during recessions, borrowing volumes drop and default rates tend to rise. So, investors in these stocks are breathing a double sigh of relief thanks to Friday's strong jobs data.

Now what

To be sure, we're still in a very volatile market. There's no way of knowing whether this is the beginning of a trend of strong economic data (and a sustainable rise in stock prices), or this is just a bear-market rally due to one piece of good news. Either way, it's fair to say that investors are taking Friday's jobs report as a sign that a recession is a lot less likely than previously thought.

Check out the latest Mastercard, Visa, American Express, and Discover earnings call transcripts.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.