Stocks rally to records in spite of grim data on jobs

Stocks rallied to more records on Wall Street as a stunningly disappointing report on the nation’s job market Friday signaled to investors that interest rates will likely stay low.

The S&P 500 rose 0.7%, topping the previous alltime high set last month. The Dow Jones Industrial Average set a record high for the third straight day.

Technology companies accounted for much of the broad rally, which included solid gains by stocks in the energy, industrial, and consumer discretionary sectors. The gains helped the S&P 500 to its eighth weekly gain in the past 10 weeks.

Wall Street acknowledged that Friday morning’s jobs report was a major disappointment. It’s usually the market’s most anticipated economic data of each month, and it showed employers added just 266,000 jobs in April. That was far fewer than the 975,000 jobs that economists expected and a steep slowdown from March’s hiring pace of 770,000.

“It was a bit of a shock when that headline number hit, but you realize most of, if not all of it, is the result not necessarily of demand, but supply,” said Peter Essele, head of portfolio management for Commonwealth Financial Network. “There seems to be a bit of a labor shortage at the moment.”

The weak report jolted the bond market and initially sent yields tumbling. The yield on the 10year Treasury briefly dropped below 1.49%, toward its lowest level in two months before recovering. By the market’s close it was unchanged from 1.56% late Thursday.

Many analysts said they don’t want to put too much emphasis on just one month of discouraging data. They still expect the economy to strengthen mightily as coronavirus vaccinations roll out.

The S&P 500 index rose 30.98 points to 4,232.60, its third straight gain. The Dow Jones Industrial Average gained 229.23 points, or 0.7%, to 34,777.76. Nasdaq picked up 119.39 points, or 0.9%, to 13,752.24.

Small company stocks also got a solid bump. The Russell 2000 index outgained the major stock indexes, climbing 30.21 points, or 1.4%, to 2,271.63.