U.S. Stocks Reach Record Highs As Jobs Data Sparks Stimulus Optimism

(RTTNews) - Stocks showed a strong move to the upside over the course of the trading session on Friday. After ending the previous session mixed, the major averages all climbed to new record closing highs.

The major averages ended the session at their best levels of the day. The Dow advanced 248.74 points or 0.8 percent to 30,218.26, the Nasdaq climbed 87.05 points or 0.7 percent to 12,464.23 and the S&P 500 jumped 32.40 points or 0.9 percent to 3,699.12.

For the week, the Nasdaq spiked by 2.1 percent, the S&P 500 surged up by 1.7 percent and the Dow shot up by 1 percent.

The strength on Wall Street comes despite the release of a report from the Labor Department showing much weaker than expected job growth in the month of November.

The Labor Department said non-farm payroll employment rose by 245,000 jobs in November after jumping by a downwardly revised 610,000 jobs in October.

Economists had expected employment to increase by 469,000 jobs compared to the addition of 638,000 jobs originally reported for the previous month.

Despite the weaker than expected job growth, the unemployment rate dipped to 6.7 percent in November from 6.9 percent in October. The unemployment rate was expected to edge down to 6.8 percent.

However, the bigger than expected drop in the unemployment rate came as a 400,000-person decline in the labor force far outpaced the 74,000-person drop in the household measure of employment.

"The latter is not too much of a concern given it follows a 2.3 million gain in October, but the drop in the labor force, which is now 4 million below its pre-pandemic level, is a worrying sign that the unemployed are giving up looking for work," said Michael Pearce, U.S. Senior Economist at Capital Economics.

Continued optimism about coronavirus vaccines may be helping traders shrug off the disappointing jobs data, as the slowdown in job growth came amid the recent surge in new cases and subsequent restrictions.

Traders may also be hoping that the weaker than expected job growth will spur lawmakers in Washington to finally pass a new fiscal stimulus bill.

In a post on Twitter, Senate Minority Leader Chuck Schumer, D-N.Y., said the jobs data "shows the need for strong, urgent emergency relief is more important than ever."

House Speaker Nancy Pelosi, D-Calif., also claimed that the weaker than expected job growth has created "momentum" toward a stimulus deal.

Democratic and Republican leaders have resumed negotiations over a new stimulus bill, although it remains to be seen if they can reach an agreement after months of stagnation.

Sector News

Energy stocks continue turned some of the market's best performances on the day, benefiting from an increase by the price of crude oil. Crude for January delivery climbed $0.62 to $46.26 a barrel.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index skyrocketed by 7.4 percent, the NYSE Arca Oil Index spiked by 6 percent and the NYSE Arca Natural Gas Index soared by 5.4 percent.

Significant strength was also visible among steel stocks, as reflected by the 4.6 percent jump by the NYSE Arca Steel Index. The index reached its best closing level in two years.

Computer hardware stocks also saw considerable strength on the day, driving the NYSE Arca Computer Hardware Index up by 3.8 percent to a record closing high.

Semiconductor, chemical and networking stocks also moved notably higher, while utilities stocks moved to the downside over the course of the session.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 225 Index dipped by 0.2 percent, while China's Shanghai Composite Index inched up by 0.1 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.'s FTSE 100 Index advanced by 0.9 percent, the French CAC 40 Index climbed by 0.6 percent and the German DAX Index rose by 0.4 percent.

In the bond market, treasuries came under pressure despite the weaker than expected jobs data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.9 basis points at 0.969 percent.

Looking Ahead

Next week's trading may be driven by reaction to developments on the stimulus front, although traders are also likely to keep an eye on reports on consumer and producer price inflation and consumer sentiment.