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Wall Street Hits Record High as Dismal Jobs Report Spurs Stimulus Bets

Wall Street Hits Record High as Dismal Jobs Report Spurs Stimulus Bets
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Friday, 04 December 2020 04:04 PM

Wall Street's main indexes rose to all-time highs on Friday as data showing the slowest U.S. jobs growth in six months raised investors' expectations for a new fiscal relief bill to help revive the coronavirus-hit economy.

So-called "cyclical" stocks seen as particularly sensitive to the economy, such as energy, materials and industrials, shined as most S&P 500 sectors rose.

The Labor Department's closely watched report showed nonfarm payrolls increased by 245,000 jobs in November, below economists' expectations of 469,000 jobs and the smallest gain since the labor recovery started in May.

President-elect Joe Biden said Friday's "grim" jobs report shows the economic recovery is stalling and warned the "dark winter" ahead would exacerbate the pain unless the U.S. Congress passes a coronavirus relief bill immediately.

"The bad news of the weakening jobs picture is potentially good news for investors because it means that the stimulus bill is much more likely to take place in a fairly short time frame," said Ryan Detrick, senior market strategist at LPL Financial in North Carolina.

The Dow Jones Industrial Average rose 248.74 points, or 0.83%, to 30,218.26, the S&P 500 gained 32.40 points, or 0.88%, to 3,699.12 and the Nasdaq Composite added 87.05 points, or 0.7%, to 12,464.23.

The Dow Jones Transportation Average and the small-cap Russell 2000 also posted record closing highs.

The benchmark 10-year yield hit its highest level since March at over 0.98%, helping support financial shares which are highly sensitive to interest rates.

The energy sector jumped 5.4%, bolstered by gains in oil prices. Shares of Diamondback Energy Inc surged 12.7% and Occidental Petroleum gained 13.4%.

"There is just a lot of catch-up happening with those sectors and sub-sectors that have really struggled year to date," said Eric Freedman, chief investment officer at U.S. Bank Wealth Management.

Utilities lagged the most among major sectors, falling 1%.

Positive coronavirus vaccine updates from drugmakers have raised investor hopes for an economic recovery next year and overshadowed worries over a surge in U.S. infections, helping the major indexes to another week of gains after the benchmark S&P 500 surged over 10% in November.

In company news, Boeing shares fell 1.9% as a top company executive said the company is reducing production of its 787 Dreamliner for the fourth time in 18 months.

Advancing issues outnumbered declining ones on the NYSE by a 3.54-to-1 ratio; on Nasdaq, a 2.95-to-1 ratio favored advancers.

The S&P 500 posted 50 new 52-week highs and no new lows; the Nasdaq Composite recorded 222 new highs and 6 new lows.

About 11.4 billion shares changed hands in U.S. exchanges, below the 11.8 billion daily average over the last 20 sessions.

GLOBAL MARKETS

Growing prospects for a U.S. coronavirus relief package after a grim employment report helped boost demand for riskier assets on Friday, sending major stock benchmarks to new records and oil prices to their highest since March when widespread lockdowns aimed at curtailing the pandemic took effect.

U.S. Treasury bonds, meanwhile, dipped in anticipation of increased borrowing to fund economic recovery measures.

The hopes for a quicker passage of a stimulus bill helped push global stock benchmarks to record highs. MSCI's gauge of stocks around the globe gained 0.71% following mixed trading in Asia and modest gains in Europe.

On Wall Street, stock indexes reached fresh all-time highs. The Dow Jones Industrial Average rose 248.74 points, or 0.83%, to 30,218.26, the S&P 500 gained 32.4 points, or 0.88%, to 3,699.12 and the Nasdaq Composite added 87.05 points, or 0.7%, to 12,464.23.

The euro touched its highest since April 2018 against the dollar before the greenback slightly rebounded. The dollar index rose 0.153%, inching back from 2-1/2 year lows.

Benchmark U.S. 10-year notes fell 16/32 in price to yield 0.9742%, up from 0.921% late on Thursday.

"November's report is the weakest monthly jobs number of the pandemic rebound, and markets are clearly betting that today's result will pull forward stimulus talks, necessitating greater supply," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott.

German industrial orders rose more than expected on the month in October, data showed on Friday, raising hopes the manufacturing sector in Europe's biggest economy started the fourth quarter on a solid footing during a resurgence of the pandemic.

Oil prices got an additional lift after OPEC and Russia agreed to reduce their deep oil output cuts from January by 500,000 barrels per day.

The increase means the Organization of the Petroleum Exporting Countries and Russia, a group known as OPEC+, would move to cut production by 7.2 million barrels per day, or 7% of global demand from January, compared with current cuts of 7.7 million barrels per day.

U.S. crude rose 0.83% to $46.02 per barrel and Brent was at $49.00, up 0.6% on the day.

Spot gold dropped 0.3% to $1,835.46 an ounce. U.S. gold futures fell 0.05% to $1,835.80 an ounce.

© 2021 Thomson/Reuters. All rights reserved.


   
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Wall Street's main indexes rose to all-time highs on Friday as data showing the slowest U.S. jobs growth in six months raised investors' expectations for a new fiscal relief bill to help revive the coronavirus-hit economy.
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Friday, 04 December 2020 04:04 PM
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