Friday’s Stock Market Close: US Equities Rally As Traders Shrug Off Horrific April Jobs Report

U.S. stocks rallied on Friday as traders shrugged off a historically bad April jobs report and focused on the U.S. economy gradually reopening businesses and on signs that trade tensions between Washington and China are easing.

The Dow Jones Industrial Average gained 455.43 points to 24,331.32, while the S&P 500 rose 48.61 points to 2,929.80 and the Nasdaq Composite Index jumped 141.66 points to 9,121.32.

For the week, the Dow gained 2.5%.

Friday’s volume on the New York Stock Exchange totaled 4.13 billion shares with 2,440 issues advancing, 31 setting new highs, and 519 declining, with six setting new lows.

Active movers were led by Ford Motor Co. (F), General Electric Co. (GE) and Norwegian Cruise Line Holdings Ltd. (NCLH).

The U.S. labor market lost a record 20.5 million jobs in April as the unemployment rate soared to 14.7%, the Labor Department reported Friday.

“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.

“It’s a bad environment,” said Robert Tipp, chief investment strategist at PGIM Fixed Income. “But in terms of markets, they appear to be attractively priced relative to what’s going on.”

Timothy McBride, an economist at Washington University in St, Louis, tweeted: “This is the largest increase in the unemployed ever recorded in one month.”

Justin Wolfers, an economist at University of Michigan, tweeted: “This is obviously the steepest decline in labor market conditions ever, and I can almost guarantee that it's the worst that you'll ever see in your lifetime.”

Mark Zandi, chief economist at Moody’s Analytics, thinks job losses will peak in the next few weeks, and the jobless rate may jump to about 20% in May.

“Then we’ll get a bounce if we don’t get a second wave [of infections] in the summer months,” he said. “The unemployment rate will be cut in half by Election Day. Then we go nowhere fast until there’s a therapy we all feel good about — not only a vaccine but one that’s widely distributed.”

But Zandi warned things will not return to normal and many small businesses may never come back.

“It’s just the pervasive uncertainty. The virus is still out there and can come roaring back. People just won’t be traveling, business won’t be investing. There won’t be the same kind of global trade. People just won’t get back to normal. People will be distancing,” he said. “There’s going to be a lot of business failures and bankruptcies. You can already see it. They’re going to be in such a weakened state they [won’t] rehire the people they had before.”

The Commerce Department said wholesale inventories slipped by 0.8% in March after falling by 0.7% in February.

Top trade officials from the U.S. and China spoke late Thursday to discuss trade issues, including the “phase one” deal which was signed in January, suggesting tensions may be easing between Beijing and Washington.

Some analysts were surprised by the recent rally in stocks, particularly tech names.

“It’s amazing really given we’re still working from home,” said J.J. Kinahan, chief market strategist at TD Ameritrade. “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 observed that traders appear to be expecting a swift reopening of the U.S. economy.

“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?,” he pondered.

Overnight in Asia, markets traded higher. The Shanghai Composite rose 0.83%; Hong Kong’s Hang Seng gained 1.04%; while Japan’s Nikkei-225 jumped 2.56%.

In Europe markets finished higher, as Britain’s FTSE-100 rose 1.4%, while France’s CAC-40 climbed 1.07% and Germany’s DAX gained 1.35%.

Crude oil futures gained 4.67% at $24.65 per barrel, Brent crude slipped 0.36% at $30.86. Gold futures fell 0.93%.

The euro edged up 0.04% at $1.0838 while the pound sterling rose 0.36% at $1.2406.

The yield on the 10-year Treasury surged 8.08% to 0.682% while yield on the 30-year Treasury jumped 4.84% to 1.386%.