The Dow advanced 3.2%, or 829 points, by market close, after adding as many as 1,056 points at session highs. The Nasdaq Composite rallied more than 2% to a record intraday high, but pared gains to fall just a few points short of its record closing high of 9,817.18 from February 19. The S&P 500 was up 2.6% for the day to 3,193.93, and remains 6% below its February 19 closing high.
Stocks also posted sharp gains for the week, kicking off June on strong footing. The Nasdaq rose 3.4% for the week, the S&P 500 advanced 4.7%, and the Dow jumped 6.8%. Individual stocks in the travel and tourism sector that had lagged for the year to date posted strong weekly gains, and the energy, financials and industrials sectors outperformed in the S&P 500.
The Labor Department’s jobs report Friday morning stunned market watchers, showing that the beleaguered economy added 2.5 million jobs last month, when consensus forecasts had called for another 8 million payrolls to be slashed. Meanwhile, the unemployment rate rose to 13.3%, well below expectations of a surge to 19.5%.
According to the Bureau of Labor Statistics, “total nonfarm payroll employment increased by 2.5 million in May, reflecting a limited resumption of economic activity that had been curtailed due to the coronavirus pandemic and efforts to contain it.”
The data pointed to a big rally on Wall Street, and suggested the economy could be on a much quicker than expected path to recovery. Hopes that more businesses were ramping up activity amid the pandemic, along with optimism about a raft of new stimulus measures across the globe, eclipsed concerns of protests and unrest in many cities across the country.
Some businesses have also begun seeing a pick-up in consumer and business activity from the doldrums of late March and April.
American Airlines (AAL) said Thursday it was scheduled to fly more than 55% of its July 2019 domestic capacity for July this year, up from just 20% in May, citing “improving demand for air travel.” The announcement sparked back-to-back double digit percentage gains in American Airlines’ stock Thursday and Friday, bringing American’s weekly advance to 76.7%. Shares of peer airlines also rose in sympathy, and aircraft manufacturer Boeing (BA) rose 40.84% on the week for its best weekly advance in 10 weeks.
Investors have also begun showing an increased appetite for newly public companies, snapping up shares of companies making their public debuts this week after a virtual IPO market freeze in the midst of the coronavirus pandemic. Software information database company ZoomInfo Technologies (ZI) shares closed 62% higher Thursday in their first day of trading, in the first U.S. technology IPO since April. This came a day following Warner Media Group’s (WMG) own public debut on the Nasdaq, after the company raised $1.93 billion in an upsized initial public offering for the largest U.S. listing so far this year.
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4:06 p.m. ET: Stocks close sharply higher, Nasdaq within striking distance of record close
Here’s where the three major indices settled as of market close Friday:
S&P 500 (^GSPC): +81.58 points (+2.62%) to 3,193.93
Gold (GC=F): -$44.20 (-2.62%) to $1,682.20 per ounce
10-year Treasury (^TNX): +10.9 bps to yield 0.929%
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10:44 a.m. ET: Trump says economy is on a ‘rocket ship’ recovery after jobs report
In a press conference Friday morning, President Donald Trump underscored his expectation for a much faster and stronger than expected economic recovery out of the coronavirus pandemic, following the May jobs report.
“Now we’re opening, and we’re opening with a bang,” Trump said “And we’ve been talking about the V [V-shaped recovery]. This is better than a V – this is a rocket ship. This is far better than a V.”
Trump added he felt investors who bet against a speedy recovery got it wrong.
“Warren Buffett sold airlines a little while ago,” Trump said. “He’s been right his whole life, but sometimes even somebody like Warren Buffett – I have a lot of respect for him – they make mistakes, they should have kept the airline stocks because the airline stocks went through the roof today, and others did too.”
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10:12 a.m. ET: Here’s what economists are saying about the blowout May jobs report
The May jobs report represented a massive upside surprise, shocking market participants bracing for a surge in the unemployment rate to the highest since the Great Depression. The report spurred cautious optimism among analysts, suggesting the economic recovery coming out of the coronavirus pandemic may be faster than previously anticipated.
Michael Pearce, Capital Economics senior U.S. economist: “The surprise 2.5 million rise in payroll employment last month indicates that the process of rehiring began sooner than the jobless claims figures suggested. With more states moving to loosen their lockdowns in the coming weeks, particularly in the populous Northeast, employment looks set to continue rebounding in June and beyond, although we still think it will be a long time before the labour market is anywhere near back to its pre-virus state.”
Mike Loewengart, E-Trade Financial Corporation managing director: “It’s a plot twist many didn’t see coming ... While this is shows we’re moving in the right direction, the economy is still in very fragile conditions and we’ll need to see consistency in jobs data and other fundamental indicators before we can even attempt to consider normalcy again.”
Chris Zaccarelli, Independent Advisor Alliance chief investment officer: “Look for the more cyclical sectors – Financials, Industrials, Energy and Materials – to start moving higher and we could see the more interest rate-sensitive assets such as Utilities stocks and bonds sell off as a result of this news.”
Nick Bunker, Indeed economic research director: “The bounceback started earlier than most expected, but don’t get too excited about this one month of data. Job growth rising by 2.5 million and the unemployment rate dropping by over a percentage point are positive developments, but it’s not clear how enduring this will be. Furthermore, the labor market is still in a terrible spot with employment only 87% of where it was before the coronavirus crisis began.”
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9:33 a.m. ET: Stocks open sharply higher after shocking U.S. jobs report
Here were the main moves in markets as of 9:33 a.m. ET:
S&P 500 (^GSPC): +61.28 points (+1.97%) to 3,173.63
8:30 a.m. ET Friday: Futures surge after May payrolls data shocks to the upside
Expect the unexpected: The economy actually created 2.5 million jobs last month, despite employers reeling from the COVID-19 crisis. Meanwhile, the unemployment rate checked in at a relatively tame 13.3%, compared to expectations of 19.0% down from April’s 14.7%.
Here’s where stocks were trading after the data:
S&P 500 futures (ES=F): 3,147.25, up +36.75 (+1.18%)
Dow futures (YM=F): 26,727.00, up +474.00 (+1.81%)
Nasdaq futures (NQ=F): 9,647.00, up +20.75 (+0.22%)
NEW YORK, NY - APRIL 30: A boarded up Coach store is seen on April 30, 2020 in New York City. Coach's parent company Tapestry reported that sales were down nearly 20 percent because of store closures due to the coronavirus (COVID-19) pandemic worldwide. (Photo by Eduardo MunozAlvarez / VIEWpress via Getty Images)
