The S&P 500 jumped another 2.6% Friday after a report said the U. S. job market surprisingly strengthened last month, bolstering hopes that the worst of the recession may have already passed.
For weeks, critics said Wall Street’s big rally made no sense when the economy seemed set for only more despair. On Friday, it got a bit of validation.
The S&P 500 jumped another 2.6 percent after a report said the U. S. job market surprisingly strengthened last month, bolstering hopes that the worst of the recession may have already passed. Employers added 2.5 million workers to their payrolls, when economists were expecting them instead to slash another 8 million jobs.
While economists cautioned that it’s just one month of data and that many risks still loom on the long road to a full recovery, the report gives some credence to the optimism that’s been building among stock investors that the economy can climb out of its current hole faster than forecast. That hope has been a big reason for the S&P 500’s rally of more than 40 percent since late March.
The S&P 500 is now down just 5.7 percent from its record set in February after being down nearly 34 percent earlier this year when recession worries were peaking.
“It looks like the healing process is underway in the jobs market and it looks like it’s happening sooner than expected,” said Todd Lowenstein, equity strategy executive of The Private Bank at Union Bank. “It looks like the worst is behind us.”
The S&P 500 rose 81.58 points to 3,193.93 for its eighth gain in the last 10 days. The Dow Jones Industrial Average gained 829.16, or 3.2 percent, to 27,110.98, and the Nasdaq composite rose 198.27, or 2.1 percent, to 9,814.08.
The yield on the 10-year Treasury rose to 0.88 percent from 0.82 percent late Thursday. This area of the market was much earlier than stocks to give warning about the coming economic devastation from the coronavirus outbreak. It had also been showing much more caution than stocks recently.
Now, the 10-year yield is close to its highest level since March, according to Tradeweb. It tends to move with investors’ expectations for the economy’s strength and inflation.
