Dow jumps more than 300 points even after record job losses as investors bet the worst has passed

FAN Editor

Stocks rose 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 traded 352 points higher, or 1.5%. The S&P 500 gained 1.3% while the Nasdaq Composite also climbed 1.3%. The major averages were headed for their first weekly gains in three. 

The Labor Department said a record 20.5 million jobs were lost last month, adding the unemployment rate jumped to 14.7% from just 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%.

“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. 

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. The S&P 500 has bounced more 30% from its virus low and is just 15% from a record.

The Nasdaq Composite is more than 35% off its lows and is now up 1.4% 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?”

It’s helped that oil has rebounded off its lows. Crude is up more than 20% this week.

Stocks that would benefit from reopening the economy rose again Friday. Airlines, Disney, MGM Resorts and Hilton Worldwide were all higher.

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.”

“It also suggests that the relief that the worst case medical scenarios are likely to take place is being replaced by an understanding of just how daunting the task of reopening and rebuilding economies will be in the coming months, leaving the SPX unable to move up and challenge key resistance at 3,000,” he said in a note.

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