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Nasdaq Hits Closing High After Biggest Payrolls Jump on Record

Nasdaq Hits Closing High After Biggest Payrolls Jump on Record

Thursday, 02 July 2020 04:05 PM

Wall Street closed higher and the Nasdaq reached an all-time closing high on Thursday as investors headed into their long holiday weekend buoyed by a record surge in payrolls, which provided assurance that the U.S. economic recovery was well under way.

All three major U.S. stock averages advanced, with the benchmark S&P 500 posting its fourth straight daily gain. U.S. financial markets will be closed on Friday in observance of Saturday's Independence Day holiday.

Massive stimulus and hopes for a speedy economic rebound have returned the S&P 500 and the Nasdaq to 7.6% and 12.6% below their record highs reached in February.

The indexes registered strong gains for the week.

The U.S. economy added 4.8 million jobs in June according to the Labor Department, 1.8 million more than analysts expected, setting a second consecutive record.

Massive rehiring sent the unemployment rate down to 11.1%.

"There was a lot to like in economic data for the week," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. "And there's still talk that there will be more stimulus from Washington after they get back from the Fourth of July break."

Still, even with May and June's consecutive record payroll gains, the labor market has still recovered only a fraction of the 22 million jobs lost in the March-April plunge.

The recovery of the U.S. economy, now in its sixth month of recession, could stall as new cases of COVID-19 hit record levels and several states hit hardest by the resurgence halted or reversed plans to reopen their economies.

On Thursday, Florida reported a record-shattering 10,000 new cases of the disease, worse than any European country reported at the peak of their outbreaks.

"With the spikes (in new COVID-19 cases) we've seen the larger states - Texas, California and Florida - those states have taken steps to turn back their re-opening plans," Nolte added. "And that will slow the overall growth and consumer spending in those regions."

In the coming weeks, market participants will train their focus on second-quarter reporting season. In aggregate, analysts now expect S&P earnings to have dropped by 43.1% as companies grappled with plunging demand and disrupted supply chains.

The Dow Jones Industrial Average rose 92.39 points, or 0.36%, to 25,827.36, the S&P 500 gained 14.15 points, or 0.45%, to 3,130.01 and the Nasdaq Composite added 53.00 points, or 0.52%, to 10,207.63.

The CBOE Volatility index, a barometer of investor anxiety, logged its largest weekly point drop since the week ending May 8.

Of the 11 major sectors in the S&P 500, all but real estate and communications services closed higher, with materials enjoying the largest percentage gain.

Microsoft Corp provided the biggest boost to the S&P 500, and in June retained its top spot as the most globally invested stock, according to data from trading platform eToro.

Tesla Inc jumped 8.0% after the electric car maker's second-quarter vehicle deliveries beat Wall Street estimates.

Advancing issues outnumbered declining ones on the NYSE by a 1.90-to-1 ratio; on the Nasdaq, a 1.28-to-1 ratio favored advancers.

The S&P 500 posted 36 new 52-week highs and no new lows; the Nasdaq Composite recorded 123 new highs and 10 new lows.

Volume on U.S. exchanges was 10.03 billion shares, compared with the 13.24 billion average over the last 20 trading days. 


 A measure of stocks across the globe rose for a fourth straight day on Thursday after June U.S. payrolls grew by a record 4.8 million, but investors also flocked to the safe-haven dollar and U.S. Treasuries on concerns about surging COVID-19 cases in many U.S. states.

Several states, along with some other parts of the world, are reversing or pausing reopenings to tackle a recent surge in infections, leaving analysts worried about another sell-off in financial markets if the damage mounts.

June's job survey, which saw the unemployment rate fall to near 11% and average wages drop 1.2%, was taken just as the spike in COVID-19 cases started to accelerate. Over 31 million Americans were still collecting unemployment checks weekly.

"The strong rebound would normally be an unambiguously positive sign that a recovery is under way, (but) it is being accompanied by a sharp rise in new infections, which was what caused the collapse in the first place," said Mike Bell, global market strategist at JP Morgan Asset Management in London.

"It is therefore too soon to say for certain that this recovery in employment sounds the all-clear for investors."

The pan-European STOXX 600 index rose 1.97% and MSCI's gauge of stocks across the globe gained 0.92%. Emerging market stocks rose 2.24%.

Japan's Nikkei futures rose 0.52% and overnight, MSCI's broadest index of Asia-Pacific shares outside Japan closed 2.29% higher.

On Thursday, oil futures prices were lifted by the U.S. employment numbers but gains were limited as the spike in U.S. coronavirus infections fanned concerns that economic activity would weaken in coming weeks.

U.S. crude rose 1.26% to $40.32 per barrel and Brent was at $42.79, up 1.81% on the day.

Treasury yields initially rose after the strong jobs numbers, but backtracked and traded lower for most of the session.

Benchmark 10-year notes last rose 4/32 in price to yield 0.6693%, from 0.682% late on Wednesday.

The 30-year bond last rose 4/32 in price to yield 1.4292%, from 1.434%.

"The knee-jerk move in the wake of the jobs report made sense," said Ben Jeffery, a strategist at BMO Capital Markets in New York. "But clearly people were reluctant to sort of push that sell-off just given the headline risk over the weekend and the fact that things on the virus front still seem to be worsening."

The dollar edged higher after initially softening on the payroll numbers. The dollar index rose 0.065%, with the euro down 0.11% to $1.1238.

"Dollar performance will hinge on the U.S. response to COVID," said Juan Perez, senior currency trader at Tempus Inc in Washington. "On that end, the U.S. is losing because the situation is far more difficult than in other parts of the world."

The Japanese yen weakened 0.02% versus the greenback to 107.52 per dollar, while sterling was last trading at $1.2464, down 0.05% on the day.

© 2020 Thomson/Reuters. All rights reserved.

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Wall Street closed higher and the Nasdaq reached an all-time closing high on Thursday as investors headed into their long holiday weekend buoyed by a record surge in payrolls, which provided assurance that the U.S. economic recovery was well under way.
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Thursday, 02 July 2020 04:05 PM
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