US Stocks Rally After Jobs Report 06/05 09:12
Stocks are rushing higher in early trading Friday after a stunningly good
report on the U.S. job market gave Wall Street's recent rally another shot of
(AP) Stocks are rushing higher in early trading Friday after a stunningly
good report on the U.S. job market gave Wall Street's recent rally another shot
The S&P 500 was up 2.2% within the first 15 minutes of trading after the
government said that U.S. employers added 2.5 million workers to their payrolls
last month. Economists were expecting them instead to slash another 8 million
jobs amid the ongoing fallout from the response to the coronavirus pandemic.
While economists cautioned that it's just one month of data and could be
giving false hope, the report gives credence to the building optimism among
stock investors that the economy can recover relatively quickly from its
current hole. That hope has been a big reason for the better than 40% rally for
the S&P 500 since late March.
The S&P 500 is now down only about 6.3% from its record set in February
after earlier being down nearly 34%.
"It looks like the healing process is underway in the jobs market and it
looks like it's happening sooner than expected," said Todd Lowenstein, equity
strategy executive of The Private Bank at Union Bank. "It looks like the worst
is behind us."
The Dow Jones Industrial Average was up 756 points, or 2.9%, at 27,037, as
of 9:45 a.m. Eastern time, and the Nasdaq was up 1.6%.
In another show of increased confidence, the yield on the 10-year Treasury
zoomed up to 0.90% from 0.82% late Thursday. This area of the market was much
earlier than stocks to give warning about the coming economic devastation from
the coronavirus outbreak. It had also been much slower to rise than stocks
recently, but the 10-year yield is now close to its highest level since late
Stocks began their tremendous rally in late March after the Federal Reserve
came to the rescue once again with promises of immense aid to keep markets
running smoothly. Capitol Hill also agreed on unprecedented amounts of aid for
the economy, which helped eliminate the worst-case scenario for many investors
of a full-blown financial crisis.
More recently, it's been hopes that growth can resume for the economy as
states across the country and nations around the world relax lockdown
restrictions meant to slow the spread of the virus. Even as horrific and
historic data continued to come in on the job market and economy, stocks
largely remained resilient in their climb.
If their optimism proves to be right, it wouldn't be the first time. During
past recessions, stocks have historically hit their bottom and turned upward
months before the economy has. That's because investors are setting stock
prices now for where they see corporate profits heading months into the future.
Continuing a recent trend, investors on Friday continued to move out of
stocks that had been earlier winners in the weak, stay-at-home economy and into
companies that would benefit most from a growing economy.
Smaller stocks had the market's biggest gains, as they typically do when
expectations for the economy are rising. The Russell 2000 of small-cap stocks
Among the biggest stocks, energy producers, banks and industrial companies
were jumping to the biggest gains. Their profits tend to be very closely tied
to the strength of the economy.
Travel-related companies were also strong, after their stocks got pummeled
early in the outbreak on worries that no one would want to fly or go onto a
cruise ship for a long time.
American Airlines Group jumped 29%, tacking even more gains onto its 41.1%
surge a day before when it said it would fly more of its regular U.S. schedule
in a bet that fliers will return to the skies.
Norwegian Cruise Line rose 20.8%, and United Airlines jumped 21.6%.
Retailers and owners of shopping malls surged on hopes that people may also
head back to enclosed stores. Kohl's added 15.3%, and Simon Property Group rose
The stocks that had been the steadiest earlier this year when investors were
searching for stay-at-home winners, meanwhile, were lagging the market.
Netflix, whose subscriber rolls swelled with people hunkering down at home,
slipped 0.2%. Clorox, whose disinfecting wipes had been cleared off shelves,
was down 2.5%, and Amazon slipped 0.3%.