por admin » Vie May 08, 2020 3:26 pm
Dow rises more than 400 points despite record job losses, posts first weekly gain in three
PUBLISHED THU, MAY 7 20206:00 PM EDTUPDATED MOMENTS AGO
Fred Imbert
@FOIMBERT
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Why the markets and economy are diverging during the pandemic
Stocks rose on Friday even after the ugliest monthly jobs report ever as investors bet the worst of the coronavirus and its impact on the economy has passed.
The Dow Jones Industrial Average jumped 455.43 points, or 1.9%, to 24,3331.32, closing near its session high. The S&P 500 gained 1.6%, or 48.61 points, to 2,929.80, while the Nasdaq Composite climbed 1.5%, or 141.66 points, to 9,121.32.
All three averages posted their first weekly advance in three. The Dow and S&P 500 were up 2.5% and 3.5% for the week, respectively, while the Nasdaq jumped 6%.
“You have investors that seem to be able to look through the tsunami of negative economic data and earnings and towards the potential for a gradual reopening of the economy,” said Art Hogan, chief market strategist at National Securities.
The Labor Department said a record 20.5 million jobs were lost last month, adding the unemployment rate jumped to 14.7% from 4.4%. Both the spike in job losses and the unemployment-rate surge are post-World War II records.
To be sure, neither print was as bad as feared. Economists polled by Dow Jones expected a loss of 21.5 million jobs and an unemployment rate of 16%.
Stocks have rallied aggressively off their March lows as investors bet on an eventual reopening of the economy and that many tech companies would see solid revenue even through the shutdowns. Apple said Friday it will reopen stores starting next week, with temperature checks and a limited number of customers in the location at one time.
The S&P 500 has bounced more than 30% from its virus low and is just 13.6% away from its record high. The Nasdaq Composite is more than 35% off its lows and is now up 1.6% for 2020. Gains from Facebook, Amazon Alphabet and Apple helped lift the index back into positive territory for 2020. At one point, the Nasdaq was down more than 25% year to date.
“It’s amazing really given we’re still working from home,” said JJ Kinahan, chief market strategist at TD Ameritrade, about the average clawing back its 2020 losses. “Our reality is we’re working from home and some of the economic demand would seem to be less, yet these stocks continue to fight through.”
Kinahan also noted the market continues to price in a swift reopening of the U.S. economy after the coronavirus forced economic activity to a near screeching halt. “There’s this sense of, ‘OK, we’re going to get back to work and things are going to be better.’ But at what pace are they going to get better, and will that be sustainable?”
Stocks that would benefit from reopening the economy rose again Friday. Airline stocks such as Delta, American and United all gained at least 4.8%. Disney climbed 3.4% while MGM Resorts advanced 4.4%.
“It’s a bad environment,” said Robert Tipp, chief investment strategist at PGIM Fixed Income, about the health and economic situation. “But in terms of markets, they appear to be attractively priced relative to what’s going on.”
Sentiment on Wall Street was also aided after Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer spoke to Chinese Vice Premier Liu He late on Thursday about the phase one trade deal signed in January. In a statement, they said both sides “agreed that in spite of the current global health emergency, both countries fully expect to meet their obligations under the agreement in a timely manner.”
The call and subsequent statement came amid rising tensions between both countries, as U.S. officials criticized China’s initial handling of the coronavirus outbreak.
But Michael Shaoul, chairman and CEO of Marketfield Asset Management, said the market’s recent moves — which have been tame compared to others seen this year — suggest “an understandable fatigue with the constant stream of conflicting information about the progress of the virus and potential for happier and more drastic outcomes in the months ahead.”
— CNBC’s Yun Li contributed reporting.
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