TOPLINE
The stock market finished nearly 2% higher on Friday, despite one of the worst monthly jobs reports in history, as investors continued to look toward a reopening of the economy and bet that the worst of the economic impact from coronavirus has passed.
The market moved higher, despite over 20 million job losses in April.
Johannes Eisele/AFP via Getty Images
KEY FACTS
The Dow Jones Industrial Average rose 1.9%, 450 points, on Friday, while the S&P 500 was up 1.7% and the Nasdaq 1.6%.
Those gains came even amid a historically bad jobs report from the Labor Department, the worst since the 1929 Great Depression.
Some 20.5 million jobs have been eliminated in April—that’s nearly every job created over the past decade, gone in a single month.
The unemployment rate shot up to 14.7% as the economy ground to a halt due to coronavirus shutdowns.
But neither figures were as bad as expected on Wall Street, however: Economists polled by Dow Jones expected 21.5 million jobs lost and an unemployment rate of 16%.
“Today’s report tells us the labor market isn’t as dire as the headlines suggest, which is why equity prices and bond yields are getting a lift,” says Charlie Ripley, senior investment strategist for Allianz Investment Management.
Surprising fact
Just two months ago, the unemployment rate was sitting at a 50-year low of 3.5%, after the United States had been adding jobs every month for nearly a decade.
Crucial quote
“In one month, we nearly wiped out all of the jobs created the previous 10 years, which puts in perspective just how devastating this pandemic has been,” according to Ryan Detrick, senior market strategist for LPL Financial. “Here’s the catch. As our country starts to open back up, many of those jobs will come back, potentially quickly.”
“Perhaps the ‘best’ news in the report was that of the 23 million workers who were unemployed in April, about 18 million thought that this was short-term (presumably expecting to be brought back to work within six months),” says Nationwide Chief Economist David Berson.
Key background
Stocks have rallied aggressively off their March lows as Wall Street becomes increasingly optimistic about a reopening of the economy. Despite dismal economic data and first quarter corporate earnings reports, stocks have looked beyond the near-term turmoil caused by coronavirus. The market has moved higher in recent weeks as several states—including Georgia, Florida, Texas and California—begin to reopen businesses and lift coronavirus lockdowns. The S&P 500 has bounced back more than 30% from its low in late March, now just 15% off a record high. The Nasdaq
NDAQ
Further reading
Stocks Lose Steam After Fed Vice Chairman Says Economy Needs More Support (Forbes)
Stocks Had Their Best Month In 33 Years, But Here’s Why Experts Are Skeptical (Forbes)
The U.S. Economy Will Beat Coronavirus, Buffett Says: ‘Never Bet Against America’ (Forbes)