Wall Street ticks back toward highs despite dour jobs report
U.S. stocks are heading back toward record highs on Friday, despite discouraging data detailing how much damage the deepening pandemic is doing to the job market
NEW YORK — U.S. stocks are ticking higher and heading back toward record highs on Friday, despite discouraging data detailing how much damage the deepening pandemic is doing to the job market.
The much weaker-than-expected jobs report may perversely have been bad enough to help kick Congress out of its paralysis and deliver more support for the economy. Hopes also remain deeply rooted on Wall Street that one or more coronavirus vaccines are on the way to rescue the global economy next year.
The S&P 500 was 0.5% higher in early trading, putting it on pace to erase its slight loss from the day before and return to a record. The Dow Jones Industrial Average was up 136 points, or 0.5%, at 30,105, as of 9:43 a.m. Eastern time, and the Nasdaq composite was 0.2% higher.
The initial reaction in financial markets to November’s disappointing jobs report was to fall. Treasury yields sank, and U.S. stock futures wobbled after the data showed employers added just 245,000 jobs last month, half of what economists were expecting. It marked a sharp step down from October’s gain of 610,000 and was the fifth straight month of slowing growth.
Economists called the numbers disappointing and evidence that the worsening pandemic will likely destroy more jobs and income for the economy in the coming months, which are shaping up to be a bleak winter.
But markets quickly recovered amid expectations that the dour data could spur some action from Congress, which has dithered for months after much of its last round of financial support for the economy expired during the summer.
“Overall, today’s report is beckoning lawmakers to act on additional fiscal stimulus measures in order to bridge the output gap in the economy until a vaccine is deployed, and the longer they hold out the wider the gap may become,” said Charlie Ripley, senior investment strategist for Allianz Investment Management.
Democrats and Republicans have been making on-and-off progress on talks for another round of support for the economy, including aid for laid-off workers and industries hit hard by the pandemic. Momentum this week has seemed to swing back to “on” after Democrats signaled willingness to accept a smaller package than they were earlier demanding.
House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell spoke on the phone about a possible deal on Thursday, and lawmakers from both parties have been voicing support for a bipartisan deal. Many obstacles remain, though.
The hope in markets is that financial support from Washington could help carry the economy through a dark winter. Surging coronavirus counts, hospitalizations and deaths are pushing governments around the world to bring back varying degrees of restrictions on businesses. They’re also scaring consumers away from stores, restaurants and other normal economic activity.
Hopefully, the economy will be able to stand more on its own accord next year after one or more COVID-19 vaccines help start a slow return to more normal conditions.
Such hopes have helped stocks muscle higher since early November, though the momentum has slowed a bit recently as the pandemic accelerates at a troubling rate. The S&P 500 is on pace to close this week with a 1.2% gain, following up on November’s 10.8% surge.
In European stock markets, the German DAX was up 0.1%, while the French CAC 40 rose 0.3%. The FTSE 100 was up 0.7%.
In Asia, Japan’s Nikkei 225 slipped 0.2%, but other markets were stronger. South Korea’s Kospi gained 1.3%, Hong Kong’s Hang Seng gained 0.4% and stocks in Shanghai added 0.1%.
The yield on the 10-year Treasury shook off an initial stumble following the release of the jobs report to rise to 0.96%, up from 0.91% late Thursday.
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AP Business Writer Joe McDonald contributed.
