Stocks ended higher on Friday, even after the ugliest monthly jobs report ever seen, traders betting the worst of the coronavirus and its impact on the economy has passed.
The Dow Jones closed up 455 points, or 1.9%. The S&P 500 gained 1.7%, while the Nasdaq climbed 1.6%.
For the week, the Dow Jones and the S&P 500 rose 2.5% and 3.5% respectively, while the Nasdaq jumped 6%. The three averages posted their first weekly advance in three weeks.
“You have investors who seem to be able to look through the tsunami of negative economic data and profits and the potential for a gradual reopening of the economy,” said Art Hogan, market strategist at National Securities.
The Ministry of Labor said a record 20.5 million jobs were lost last month, adding that the unemployment rate fell from 4.4% to 14.7%. Soaring job losses and soaring unemployment rates are post-World War II records.
Certainly, no impression was as bad as we feared. Economists polled by Dow Jones had forecast a loss of 21.5 million jobs and an unemployment rate of 16%.
Stocks have rallied sharply from their March lows, with investors betting that the economy may reopen and that many tech companies would see solid earnings even if they closed. Apple announced Friday that it will reopen its stores next week, with temperature controls and a limited number of customers on site at a time.
The S&P 500 has rebounded to more than 30% of its low virus level and is only 15% from a record. The Nasdaq is at more than 35% of its lows and is now up 1.3% for 2020. Gains from Facebook, Amazon Alphabet and Apple helped bring the index back to positive territory for 2020 At one point, the Nasdaq has declined by more than 25% year to date.
“It’s amazing, really, given that we’re still working from home,” said JJ Kinahan, market strategist at TD Ameritrade, about the average loss recovery in 2020. “Our reality is that we’re working from home and part of the economic demand seems to be less, but these actions continue to fight. “
Kinahan also noted that the market price continues to rapidly reopen the US economy after the coronavirus forced economic activity to a near halt. “There is this feeling of” OK, we’re going to go back to work and things will get better. “But how quickly will they improve and will it be sustainable?”
On Friday, stocks that would benefit from the reopening of the economy rose again. Stocks from airlines such as Delta, American and United all gained at least 3.3%. Disney climbed 2.3% while MGM Resorts rose 3.8%.
“It’s a bad environment,” said Robert Tipp, investment strategist at PGIM Fixed Income, about the economic and health situation. “But in terms of markets, they seem to be attractively priced compared to what’s going on.”
Sentiment on Wall Street was also helped after Secretary of the Treasury Steven Mnuchin and US Trade Representative Robert Lighthizer on Thursday spoke to Chinese Vice Premier Liu He about the Live One Trade Agreement signed in January. In a statement, they said the two sides “agreed that despite the current global health emergency, the two countries fully expect to meet their obligations under the agreement in a timely manner.”
The call and the ensuing statement came amid growing tensions between the two countries, as US officials criticized China’s initial management of the coronavirus epidemic.
But Michael Shaoul, president and chief executive officer of Marketfield Asset Management, said that recent market movements, which have been tame compared to others seen this year, suggest “understandable fatigue with the constant flow of conflicting information about the progression of the virus and its potential for happier and more drastic results in the months to come. “
CNBC’s Yun Li contributed to the report.