Stocks rallied strongly Friday, after new data revealed the coronavirus pandemic sparked a historic labor market collapse in the world’s largest economy last month, a development that was counterbalanced by hopes over a gradual end to state lockdowns.
Each of the three major indices rose more than 1.5% during the session and ended the week higher. The S&P 500 rose 3.5% for the week, and the Dow increased about 2.5%. The Nasdaq, powered by an ongoing rally in tech stocks, leapt 6% on the week and closed at its highest levels since late February.
The U.S. Labor Department’s April jobs report showed U.S. employers slashed 20.5 million payrolls for the month — a bit less than Wall Street expected yet by far the highest losses on record, according to data extending back to 1939. The unemployment rate spiked to 14.7% from 4.4% in March, which would also be a record based on monthly Bureau of Labor Statistics data going back to 1948 — and government economists say that could in fact be 5 percentage points higher.
On Thursday, weekly unemployment insurance claims were shown to have totaled another nearly 3.2 million for the week ended May 2, bringing the cumulative number since the week ended March 20 to more than 33 million.
Still, the data did little to shake equities’ advance. Investors have mostly taken the grisly economic data in stride, with much of it rendered outdated by developments in the coronavirus pandemic, and plans to reopen some businesses roll in by the day. The reopening strategy offers hope of some respite from the shelter-in-place orders that have induced much of the economic damage.
“The prevailing sentiment seems to be one of optimism in response to the economic reopening, tempered by the lack of forward operating visibility and muted fears of a second wave of virus infections,” David Joy, Ameriprise chief market strategist, wrote in a note Thursday.
On the U.S.-China trade front, the Office of the U.S. Trade Representative released a statement saying U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke with China’s Vice Premier Liu He. Both sides “agreed that good progress is being made” in discussions over the implementation of the U.S.-China Phase One trade deal.
“Both countries fully expect to meet their obligations under the agreement in a timely manner,” the statement continued, helping to assuage concerns of escalating tensions between the two sides amid the global pandemic, which President Donald Trump has blamed on China.
Market participants are also betting that policymakers will to continue providing support with further stimulus measures as needed to ensure businesses and financial markets are able to make it to the other side of the pandemic.
Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said during an NBC Today show interview Thursday that “we’re going to avert the kind of Depression scenario, because policy makers are going to continue to be aggressive to fight that outcome,” while acknowledging “we’re in for a long, gradual recovery.” And also on Thursday, Mary Daly, president of the San Francisco Federal Reserve Bank, said in a Bloomberg TV interview that the U.S. Fed still has more tools to use to support economic activity.
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4:04 p.m. ET: Stocks close near session highs
Here’s where the three major indices settled at the end of Friday’s session:
S&P 500 (^GSPC): 2,929.8, up 48.61 points (+1.69%)
Nasdaq (^IXIC): 9,121.32, up 141.66 points (1.58%)
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2:45 p.m. ET: Crude oil prices settle higher after two days of declines
June futures for U.S. West Texas intermediate crude oil settled higher on Friday, after back-to-back sessions of declines. The commodity rose 5.1% to $24.74 per barrel as, bringing its weekly advance to more than 20%.
Domestic crude remains about 60% lower for the year to date, however, as demand concerns weighed on energy prices.
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12:10 p.m. ET: New York state reports 216 new virus deaths for Thursday, down slightly from prior day
New York state, the domestic epicenter of the coronavirus outbreak, reported 216 coronavirus-related deaths for Thursday, representing a tick down from the prior day and a level consistent with the one-day totals so far this week, Governor Andrew Cuomo said in a press conference.
New hospitalizations were about 600 on Thursday, or “just about flat” with the prior day, Cuomo added.
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11:55 a.m. ET: A tale of 2 market themes
The U.S. jobs market has just posted the worst unemployment rate in nearly 100 years.
So why are markets rallying? Mastercard's Vice Chairman & President of Strategic Growth, Michael Froman told Yahoo Finance on Friday that current market levels are reflecting a “stabilization phase.”
Meanwhile, deVere Group CEO and founder Nigel Green, gave a more depth explanation of two themes occurring simultaneously:
“First, a weak first half of 2020 has already been priced-in. As have the risks of a potential second wave – but the concerns of this are being largely contained as it is not such a ‘bolt out of the blue’..
Secondly, Green argues asset prices are reflective of what the economy will look like when it emerges from the pandemic:
“A closer look at the markets reveals that, of course, not all stocks and sectors are rising equally. They are being driven up across the board by the ‘winners’ of this new era including tech, biotech, home entertainment and established online retailers, amongst others.”
Stocks were perched at session highs in late morning trade.
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9:30 a.m. ET: Stocks jump at the opening bell after ‘horrific’ jobs data
Investors are unbowed from pricing in a post-pandemic recovery, with stocks soaring at the opening bell despite a jobs market that’s now rivaling the Great Depression. The April jobs report was unequivocally ugly, yet Wall Street is breathing a sigh of relief that the figures weren’t worse than expected — and that gradual state reopenings mean the economy can begin the healing process.
Here were the main moves in markets as of 9:30 a.m. ET:
Boeing (BA) is leading the Dow higher, rallying by over 5%. The troubled aerospace behemoth said on Friday it expects airlines to restore 30%-50% of flying capacity by year’s end.
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8:30 a.m. ET: Stocks hold gains after unprecedented collapse in jobs data
Wall Street continues to hope for the best after April’s jobs data showed 20.5 million people lost their jobs last month — a historic plunge yet better than economists expected. The jobless rate skyrocketed to 14.7% — the highest since the Great Depression. Stock futures shed some gains but still point to gains at the opening bell.
10-year Treasury (^TNX): yielding, 0.634, up 0.003 basis points
According to veteran market analyst Peter Boockvar, “we can analyze the internals every which way but when the jobs lost were due to a purposeful shutdown, it has a different context rather than if it was from a natural economic downturn. We need to shift the focus now to how many businesses will reopen in coming months and quarters and how many of these lost jobs will come back.”
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7:06 a.m. ET Friday: Equity futures hold onto gains ahead of jobs report
S&P 500 futures (ES=F): up 32.5 points, or 1.13%, to 2,912.5
Dow futures (YM=F): up 264 points, or 1.11%, to 24,107.00
Nasdaq futures (NQ=F): up 100 points, or 1.1%, to 9,207.75
6:08 p.m. ET Thursday: Stock futures tick up slightly
Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:08 p.m. ET:
S&P 500 futures (ES=F): up 1.5 points, or 0.05%, to 2,881.5
Dow futures (YM=F): up 27 points, or 0.11%, to 23,870.00
Nasdaq futures (NQ=F): up 1.25 points, or 0.01%, to 9,109.00
NEW YORK, NEW YORK - MAY 06: A man wearing a mask walks with an umbrella in Times Square near the American Flag amid the coronavirus pandemic on May 6, 2020 in New York City. COVID-19 has spread to most countries around the world, claiming over 263,000 lives with over 3.8 million cases. (Photo by Alexi Rosenfeld/Getty Images)
