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S&P 500 Posts 1.2% Weekly Rise to New Record High Despite April Jobs Miss as Energy, Materials Lead Strong Gains

05/07/2021 12:51

04:40 PM EDT, 05/07/2021 (MT Newswires) -- The Standard & Poor's 500 index rose 1.2% this week to a fresh record closing high despite weaker-than-expected US job gains for April, as the energy and materials sectors led a strong climb and investors were hopeful the disappointing payrolls will translate to a longer period of easy monetary policy.

The benchmark ended the week at 4,232.60, up from last week's closing level of 4,181.17 and marking its highest closing level ever. The S&P 500 is now up by nearly 13% for the year to date.

The advance came as many US corporate earnings have surpassed expectations while economic data also have painted the picture of an improving US economy, even if the recovery is a bit bumpy. Weekly jobs data released Thursday showed jobless claims fell below 500,000 last week for the first time since the COVID-19 pandemic began.

Monthly jobs data released Friday came in much weaker than expected. US nonfarm payrolls rose by 266,000 last month, a significant disappointment compared with the 1 million jobs increase expected in a survey compiled by Bloomberg and following a downwardly revised 770,000 increase in March. The unemployment rate rose to 6.1% in April from 6% in March, above expectations for a decline to a 5.8% rate.

Still, stocks rose as investors took the weaker-than-expected job gains as a sign the Federal Reserve is likely to hold off longer before changing its easy monetary policy.

Meanwhile, COVID-19 cases in the US have also been declining as vaccinations continue to be distributed, but other areas of the world continue to struggle, especially India, where cases keep setting new record highs and oxygen availability for patients is low.

By sector, energy and materials had the largest percentage increases of the week, up 8.9% and 5.9%, respectively. Other strong gainers included financials and industrials. The downside, meanwhile, was led by consumer discretionary, down 1.2%, and utilities, down 1.1%.

The energy sector's climb came as crude oil futures rose on the week. Gainers included Baker Hughes (BKR), whose shares jumped 23% from last week as Barclays upgraded its investment rating on the energy technology company's stock to overweight from equal-weight and boosted its price target on the shares to $28 from $25. Baker Hughes also said it and Bloom Energy (BE) agreed to collaborate on the potential commercialization and deployment of low-carbon power generation and hydrogen solutions to aid in energy transition.

In materials, shares of Sealed Air (SEE) climbed 16% as the company reported Q1 adjusted earnings per share and revenue above year-earlier results and analysts' expectations. Sealed Air also boosted its adjusted EPS and revenue guidance for 2021.

The decliners in consumer discretionary included shares of Etsy (ETSY), which shed 17% despite the company's Q1 results coming in above Street consensus estimates. The market was "overly optimistic" on Etsy's ability to lap its impressive 2020 growth, Morgan Stanley said, adding that the firm sees "risk for further top-line deceleration as the economy reopens further."

Next week's economic calendar features the April consumer price index on Wednesday, the April producer price index on Thursday, and April retail sales, import prices and industrial production on Friday. May consumer sentiment will also be among Friday's data releases.