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Close Update: US Stocks Rally to New Highs as Weak Jobs Growth Secures Fed's Patience

05/07/2021 13:07

05:01 PM EDT, 05/07/2021 (MT Newswires) -- US stocks set new records Friday after an unexpectedly weak April jobs report quashed speculation that the Federal Reserve might soon need to consider trimming its asset purchases.

The S&P 500 rose more than 0.7% to 4,232.60, while the Dow Jones Industrial Average gained a little under 0.7% to 34,777.76. The only major average not at a new high was the Nasdaq Composite, which advanced 0.9% to 13,752.24.

Copper jumped nearly 3% from Thursday's record high to $4.74 per pound, aided by expectations of continued monetary accommodation.

Energy and basic materials were the best-performing sectors, while consumer staples and financials lagged.

The 10-year US Treasury yield rose 2 basis points to 1.58% after falling as low as 1.52% in the morning on the US Labor Department's lackluster jobs report for April.

Nonfarm employment rose by 266,000 last month, the government reported, far short of market expectations for one million additional jobs. The unemployment rate rose to 6.1% from 6% in March, while the initially reported March gain of 916,000 nonfarm payrolls was revised downward to 770,000.

The economy lost jobs outside of the leisure and hospitality sector, which added 331,000 payrolls in April as bars and hotels reopened amid declining COVID-19 caseloads. It remained down 8.2 million jobs since February 2020, just before the pandemic hit, the Labor Department noted.

Last month, Federal Reserve Chair Jerome Powell said the Fed would need to see "a string" of million-plus monthly payroll gains "so we can really begin to show progress toward our goals.

After the "tough miss" in April "suddenly the expected 'string' of strong jobs reports has started to look more like a modest trail of crumbs, with the soft April gain and the downward revision to March pointing to a mix of overhangs in the labor market recovery," Morgan Stanley economists including Ellen Zentner said in a note.

In other economic news, the typical US home sold in the four weeks through March 2 changed hands for 1.4% above the asking price after just 19 days on the market, down from 35 a year earlier, amid a dearth of homes for sale, Redfin (RDFN) said, based on its analysis of listings from more than 400 US metro areas. The median price was up 21% year-over-year to $348,500, and a record 45% of the homes had an accepted offer within a week, Redfin said. Soaring prices for lumber used in new home construction are indirectly lifting prices of all homes, the online real estate brokerage noted.

News Corp. (NWS) was among the top performers on the S&P 500, gaining 6% after reporting fiscal third-quarter results above estimates on strong digital advertising growth.

Spectrum Brands (SPB) closed 3.5% higher after the marketer of Remington shavers, George Foreman grills, and Black Flag insecticide topped its third-quarter estimates and raised annual guidance, citing strong consumer demand aided by fiscal stimulus, and saying it plans price hikes to offset logistics cost pressures.

Supply difficulties took a toll on Monster Beverage (MNST) despite better than expected quarterly results, as the energy drink member scrambled to secure aluminum can supply sufficient to keep up with its growth. Cans are in short supply because of the shift from restaurant to home beverage consumption amid the COVID-19 pandemic. Monster's co-chief executive said he hopes the shortage will ease up by the end of 2021. The stock fell 4% Friday, the most in the S&P 500.

Gold rose nearly 1% to $1,832.70 per ounce, while silver gained $0.06 to $27.54 per ounce. West Texas Intermediate crude oil ticked up $0.07 to $64.78 per barrel; natural gas at the Henry Hub rose $0.03 to $2.96 per million BTU.