Stocks closed out the week with a bang Friday after a closely watched report on the job market surprised investors by showing that employers added to their payrolls last month, defying predictions they would slash more jobs.
The S&P 500 rose 2.6% Friday, its eighth gain in the last 10 trading days. Employers added 2.5 million jobs in May, while economists were expecting them to cut another 8 million.
To be sure the data could be an aberration, and the slog ahead is long, but the report lent credence to the optimism building that the economy can climb out of its coronavirus slump.
Markets soared on the news, which was better than any economist predicted.
The Dow Jones Industrial Average closed up 829.16 or 3.15% to 27,110.98.
The NASDAQ composite index was up 198.27 or 2.06% to 9,814.08.
The S&P 500 was up 81.58 to 3,193.93.
Global markets also rose Friday.
Germany’s DAX gained 1.7% to 12,643 and the CAC 40 in Paris added 1.9% to 5,108. Britain’s FTSE 100 rose 1.3% to 6,421. Futures for the Dow were up 1.3% while those for the S&P 500 were 0.8% higher.
Economists said the Labor Department’s monthly jobs report for May showed the unemployment rate fell to 13.3 percent in May, slightly below the April high of 14.7 percent.
As economies around the world sag under the pressure of the lockdowns they have had to enforce for weeks and are only just easing, more countries are offering fiscal and monetary stimulus.
A near doubling in the European Central Bank's pandemic relief efforts on Thursday helped soothe the sting from news that Germany's economy is forecast to contract more than 7% this year and take two years to fully recover from the downturn brought on by the coronavirus pandemic.
Earlier, in Asia, hopes for recovery helped spur strong gains this week. The Nikkei 225 index in Japan gained 0.7% to 22,863.73, its highest level close since late February.
The Hang Seng in Hong Kong surged 1.7% to 24,770.41 after authorities showed restraint as thousands of people defied a police ban to join a candlelight vigil Thursday marking the 31st anniversary of China’s crushing of a democracy movement in Beijing’s Tiananmen Square.
That appeared to have eased, at least temporarily, worries over recent efforts by Chinese leaders to exert more control over the former British colony.
India's Sensex rose 1.1% to 34,372.29 and the Kospi in South Korea jumped 1.4% to 2,181.87. Australia's S&P/ASX 200 picked up 0.1% to 5,998.70.
Regional airlines were strong gainers after American Airlines surged 41% Thursday, the biggest gain in the S&P 500. It announced it plans to fly 55% of its normal U.S. schedule next month, up from only 20% in April.
Many professional investors contend the recent rally, a nearly 40% climb for the S&P 500 since late March, is overdone and say a pullback is likely.
But the trillions of dollars in stimulus money unleashed to try to salvage economies ravaged by the pandemic are helping push prices ever higher, analysts say.
“Fundamentals of contracting GDP or expected U.S. unemployment to go above 19% today don’t count. Central Bank liquidity is what drives it all," Stephen Innes of AxiCorp said in a commentary.
Given the latest market moves, “you would think we're in the best all-time markets not in the midst of a pandemic crisis," Innes said.
The yield on the 10-year Treasury rose to 0.87% from 0.81% late Thursday after rising decisively during the day. It tends to move with investors’ expectations for inflation and the economy’s strength and was one of the first indicators warning of the coming economic devastation from the coronavirus outbreak.
In other trading, a barrel of U.S. crude oil for delivery in July rose $1 to $38.41 per barrel in electronic trading on the New York Mercantile Exchange. U.S. crude rose 12 cents to settle at $37.41 on Thursday.
Brent crude, the international standard, gained $1.33 to $41.32 per barrel. It rose 20 cents to settle at $39.99 per barrel on Thursday.
Several news agencies reported Friday that the OPEC nations and allies like Russia would hold a teleconference on Saturday.
The meeting comes as Saudi Arabia and Russia appear to want ongoing oil cuts to continue to help boost the market amid weakened demand due to the pandemic.
The dollar was trading at 109.25 Japanese yen, up from 109.15 yen late Thursday. The euro strengthened to $1.1340 from $1.1336.
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