Dow Soars as Snapback in Hiring Bolsters Bets on Economic Rebound
By Yasin Ebrahim
Investing.com – Wall Street surged Friday, as a surprise recovery in hiring suggested the labor market has turned a corner, prompting investors to raise their bets on a speedy economic comeback. The technology-heavy Nasdaq hit an intraday record.
The Dow Jones Industrial Average rose 3.58%, or 941 points, the S&P 500 gained 2.85%, while the Nasdaq Composite added 2.25%.
The U.S. economy generated 2.51 million jobs in May, confounding expectations for a loss of 8 million jobs. The unemployment rate unexpectedly fell to 13.3% in May from 14.7% a month earlier.
Most of the job gains came from sectors that had "experienced the largest declines in March and April: leisure&hospitality, personal services, retail and construction," Jefferies (NYSE:JEF) said in a note. "This is perfectly consistent with the reopening of the economy, which began in late April/early May," it added.
Corners of the market tied to the progress of reopening, and ultimately the broader recovery in the economy, continued to attract demand.
Financials, led by banks, rose 4.4% as the upbeat jobs report added to hopes that credit defaults in the second half of the year may not be as bad as many feared.
Shares of JPMorgan Chase (NYSE:JPM), Goldman Sachs (NYSE:GS) and Citigroup (NYSE:C) were sharply higher, with the latter up nearly 7%.
Travel stocks, meanwhile, were also boosted by growing expectations for a comeback in travel and tourism demand after the Trump administration eased a proposed ban against flights by mainland Chinese airlines to the U.S.
Energy jumped 7% as oil prices caught a bid on hopes for an extension to the current oil output accord after OPEC decided to bring forward its virtual meeting to Saturday.
In technology, Apple (NASDAQ:AAPL) soared 2.3% to all-time highs intraday on signs its services business continues to gather momentum.
Credit Suisse (SIX:CSGN) lifted its price target on Apple to $295 from $260, citing ongoing app store momentum in May. Despite a slow start, "stay at home" measures are now translating into a rapid acceleration in App Store revenue, which is up 39% year-on-year in May, the bank said, citing Sensor Tower data.
Google-parent Alphabet (NASDAQ:GOOGL) Inc Class C (NASDAQ:GOOG) remained close to session highs, up 1.8%, despite reports that U.S. lawmakers continue to push for the breakup of the tech giant’s ad technology business for potential antitrust violations last year.
The latest jolt higher in stocks comes as the Federal Reserve's efforts to support the broader economy continue, with the central bank's balance sheet jumping to a fresh record high of $7.213 trillion, data earlier this week showed.
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