Stocks rise on hope jobs report marks bottom
Wall Street doubled down on its bet that the worst of the recession has passed, sending stocks higher again Friday despite another historic, crushing report on the job market.
Stocks around the world were already rising before the U.S. government gave its monthly report on jobs, in part on hopes that the U.S. and China won’t restart their trade war. After the report showed employers cut a record-busting 20.5 million jobs last month, the gains actually accelerated.
While the number is a nightmare, it was slightly below the 21 million that economists told markets to brace for. More importantly, investors are betting they won’t see another report that bad again because the number of workers filing for unemployment benefits has slowly declined the last five weeks.
Instead of looking backward at last month’s job losses, some investors focused instead on the prospect of growth resuming later this year. They bought stocks of retailers that laid out plans to reopen in coming weeks, energy companies that would benefit as people start driving again and banks that may skirt the worst-case avalanche of loan defaults.
“So, equity investors are looking for that hope in the third and fourth quarter of this year,” said Megan Horneman, director of portfolio strategy at Verdence Capital
Advisors. “That’s what this optimism is about.”
The S&P 500 rose 48.61, or 1.7%, to 2,929.80 for its fourth gain in the last five days, and it closed out its first winning week in the last three. The Dow Jones Industrial Average added 455.43, or 1.9%, to 24,331.32, and the Nasdaq composite rose 141.66, or 1.6%, to 9,121.32.
Many analysts are skeptical of the rally, though, saying the economy likely won’t recover nearly as vigorously and quickly as the stock market has. Friday’s jobs report showed that the unemployment rate climbed to its highest level since the Great Depression. And if reopening economies lead to a renewed surge in infections, business shutdowns could sweep the world quickly again.