Dow closes up over 800 points after better-than-expected jobs report

Marco Green
June 6, 2020

US stock indexes jumped on Friday, with the Nasdaq Composite less than 1 per cent away from a record high, after a closely watched report showed surprise job additions in May, lending weight to hopes of a faster economic rebound from a coronavirus-led slump. At one point this year, the broader market index was down 30.3%.

US employers added a shocking 2.5 million jobs last month - the largest gain on record - while the unemployment rate slid to 13.3%, the Labor Department said Friday.

The Dow Jones Industrial Average surged 829 points or 3.15 percent, while the S&P 500 jumped 2.62 percent. Fiscal and monetary aid measures from Frankfurt and Berlin exceeded expectations this week, and reports showed that Trump administration officials expect to spend as much as US$1 trillion in the next round of aid.

On Thursday, American Airlines surged 41% for the biggest gain in the S&P 500 after it said it plans to fly 55% of its normal US schedule next month, up from only 20% in April.

And shares of luxury retailer Tiffany & Co jumped 6.5 percent after Reuters news agency reported LVMH's $16.2-bn takeover deal was back on track.

Advancing issues outnumbered declining ones on the NYSE by a 3.81-to-1 ratio; on Nasdaq, a 2.26-to-1 ratio favored advancers.

The S&P 500 has posted 26 new 52-week highs and no new lows; the Nasdaq Composite Index recorded 89 new highs and three new lows.

An unexpected jump in USA employment sent world equities and oil surging on hopes that the global economy has started to recover from the coronavirus pandemic, pulling investors out of perceived safe havens like government bonds and gold.

"The numbers are a huge surprise to the upside", said Michael Arone, chief investment strategist at State Street Global Advisors.

MSCI's gauge of stocks across the globe gained 2.04%.

Donald Trump tweeted: "Really big jobs report". The high close for the NASDAQ index is 9817.18.

Asian markets rallied across the board, with Hong Kong's Hang Seng up 1.66 percent, while Japan's Nikkei and China's Shanghai Composite gained 0.74 percent and 0.39 percent, respectively. The high price in the NASDAQ so far has reached 9755.129.

U.S. Treasurys remained under pressure, with selling driving the yield on the 10-year note up to 0.903 percent.

"The sell-off in the bond market in the last few weeks seems to be justified", said Subadra Rajappa, head of USA rates strategy at Societe Generale. JPMorgan Chase, Citigroup, Wells Fargo and Bank of America all rose at least 4%.

The MSCI Asia Pacific Index increased 0.8 per cent.

Markets got some traction from hopes for more monetary and government stimulus as the European Central Bank announced a commitment to buying 600 billion euros ($680 billion) more of bonds, almost doubling its asset purchasing program.

Campbell Soup Co beat earnings expectations and hiked its full-year forecast, but troubles meeting surging consumer demand sent its shares down 6.1%.

The S&P 500 banks sub-index, considered interest-rate sensitive, jumped 4.8 per cent as U.S. Treasury yields rose after the data.

Other reports by Click Lancashire

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