Friday’s Stock Market Close: US Equities Soar On Surprisingly Good Jobs Report, Yields Surge

U.S. stocks surged on Friday as traders embraced a much better than expected May jobs report which suggested the covid-19-related economic crisis may have bottomed out.

The Dow Jones Industrial Average surged 829.16 points to 27,110.98, while the S&P 500 gained 81.58 points to 3,193.93 and the Nasdaq Composite Index climbed 198.27 points to 9,814.08.

Nasdaq just missed setting a new closing record high.

For the week, the Dow jumped 6.8%.

Friday’s volume on the New York Stock Exchange totaled 7.8 billion shares with 2,527 issues advancing, 64 setting new highs, and 463 declining, with no stocks setting new lows .

Active movers were led by American Airlines (AAL), Luckin Coffee Inc. (LK) and Ford Motor Co. (F).

The Labor Department said on Friday that employment unexpectedly rose by 2.5 million in May – the biggest monthly gain in history -- while the jobless rate declined to 13.3% -- far better than analysts’ expectations for a rise in the jobless rate to 20%.

Donald Trump tweeted: “Really big jobs report. Great going President Trump (kidding but true)!”

“We’re back,” declared CNBC’s Jim Cramer. “I think there were a lot of people who felt that the layoffs would be permanent and it’s obvious that there’s so much demand that people have to bring people back.”

“The unemployment rate was solid; the participation rate was higher. This checks all the boxes for a solid report,” said Drew Matus, chief market strategist at MetLife Investment Management. “So even though this was coming off a horrendous report the previous month, there’s nothing that screams this is some sort of error that can be ignored. If anything, it suggests we should be looking for more good news next month.”

“We’re having an unbelievable day,” said JJ Kinahan, chief market strategist at TD Ameritrade. “The one thing I’m still cautious on is this incredible optimism trade is being driven without any earnings yet to support it.”

Mohamed A. El-Erian, chief economic adviser at Allianz called the jobs report a “surprise” and “a head scratcher that needs analysis.”

On Friday, Trump promised additional stimulus measures, including a payroll tax cut.

New orders for German manufacturing companies plunged 25.8% in April from March, the biggest fall on record.

Japan’s household spending dropped 11.1% in April from a year earlier.

Some analysts remain baffled by the ongoing U.S. stock rally.

“The market is moving on technical factors and the reopening of the economy,” said Peter Cardillo, chief market economist at Spartan Capital Securities. “But I think the market might be in for a bit of a surprise because we have earnings coming up in a few weeks. And they’re certainly not going to live up to some of the P/E ratios that are now being exhibited due to the rally we have had.”

“The economy and the stock market have generally moved in the same direction over time, though rarely in lockstep,” said Willie Delwiche, investment strategist at Baird. “The gulf between current headlines for Wall Street (best 50-day rally ever for the S&P 500) and Main Street (one-in-four American workers have now filed for jobless benefits) seems more extraordinary than normal.”

Overnight in Asia, markets finished higher. The Shanghai Composite rose 0.4%; Hong Kong’s Hang Seng rose 1.66%; while Japan’s Nikkei-225 gained 0.74%.

In Europe markets closed higher, as Britain’s FTSE-100 rose 2.25%, while France’s CAC-40 jumped 3.36% and Germany’s DAX surged 3.71%.

Crude oil futures gained 5.13% at $39.33 per barrel, Brent crude slipped 0.38% at $42.14. Gold futures dropped 2.34%.

The euro slipped 0.41% at $1.1288 while the pound sterling gained 0.56% at $1.2664.

The yield on the 10-year Treasury surged 10.24% to 0.904% while yield on the 30-year Treasury jumped 3.33% to 1.678%.