Friday’s Stock Market Open: US Equities Surge On Better Than Expected May Jobs Report

Update: 12:05 p.m. EDT:

U.S. stocks surged higher as of noon Friday.

The Dow Jones Industrial Average skyrocketed 946.31 points to 27,228.13, while the S&P 500 gained 89.73 points to 3,202.08 and the Nasdaq Composite Index climbed 200.17 points to 9,815.99.

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 4.44% at $39.07 per barrel, Brent crude jumped 4.88% at $41.95.

Original story:

U.S. stocks soared on Friday as traders cheered a much better than expected May jobs report which suggests the unemployment crisis may have bottomed out.

The Dow Jones Industrial Average jumped 682.95 points to 26,964.77, while the S&P 500 gained 62.72 points to 3,175.07 and the Nasdaq Composite Index climbed 94.05 points to 9,709.86.

The Labor Department said on Friday that employment unexpectedly rose by 2.5 million in May 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)!”

Claire Lee, global brand ambassador SVB Capital, tweeted: “Unemployment not as bad in May as some initially thought. Probably due to reopening. However, women are still losing their jobs at a larger rate than men.”

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

Shawn Donnan of Bloomberg sourly tweeted: “So the story here is temporary layoffs coming down while permanent layoffs are going up?”

Jake Sherman of Politico tweeted: “The unexpectedly strong jobs report today could very well make another coronavirus stimulus package less likely, or smaller. Whether that’s right or not is a matter of debate. But it’s a reality.”

“May was this transition month. The layoffs were very high, but in the latter part of the month, rehiring started. This employment report is probably the peak of the disaster in the labor market,” said Ethan Harris, head of global economics at Bank of America, just prior to the release of Friday’s jobs report. “The next [jobs] number will be positive. You’re going to have millions of jobs added in coming months. Our assumption is that only about half of the jobs that were lost come back over the course of the next three to six months.”

Michael Gapen, Barclays chief U.S. economist said prior to the jobs report release: “We still should have a net gain in employment beginning in June...That’s the good news. The likely bad news is the recovery is likely to be slow and halting.”

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.

“The new coronavirus is having a serious impact on the economy including spending by individuals,” said Chief Cabinet Secretary Yoshihide Suga. “We think it is necessary for us to return to regular economic activities step by step while taking counter-infection measures, as businesses are trying to survive the current situation.”

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

“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.”

Delwiche added: “While not looking past the current pain, the hope is that from these moments of uncertainty, a path toward a more hopeful future (and more robust economic participation) will emerge.”

Peter Chatwell, head of multi-asset strategy at Mizuho International, said: “We probably have a window of maybe three months where data are going to be continuing to improve. That is going to drive a very supportive backdrop for credit spreads to keep tightening and for equities to be rallying.”

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 traded higher, as Britain’s FTSE-100 rose 1.69%, while France’s CAC-40 jumped 2.55% and Germany’s DAX surged 3.17%.

Crude oil futures gained 4.06% at $38.93 per barrel, Brent crude jumped 4.85% at $41.93. Gold futures dropped 2.5%.

The euro slipped 0.17% at $1.1317 while the pound sterling gained 0.81% at $1.2696.