U.S. stock-index futures extended gains Friday, pointing to a sharply higher open after the May jobs report showed a surprise 2.5 million jump in payrolls and a drop in the unemployment rate to 13.3% as businesses began to reopen from the COVID-19 pandemic lockdowns.
How are benchmarks performing?
Futures for the Dow Jones Industrial Average YM00, +2.24% YMM20, +2.24% were up 543 points, or 2.1%, at 26,796.00, while S&P 500 futures ES00, +1.42% ESM20, +1.42% rose 43 points, or 1.4%, to 3,153.50. Nasdaq-100 futures NQ00, +0.01% NQM20, +0.01% were up 1.5 points, or less than 0.1%, at 9,627.75.
On Thursday, the Dow DJIA, +0.04% ended 11.93 points, or less than 0.1%, higher at 26,281.82. The fourth straight gain matches a similar streak of wins for the blue-chip index ended April 27, according to FactSet data. Meanwhile, the S&P 500 SPX, -0.33% fell 10.52 points, or 0.3%, to close at 3,112.35 and the Nasdaq Composite Index COMP, -0.69% finished 67.10 points, or 0.7%, lower to wrap up the session at 9,615.81, putting the index about 2.1% from its Feb. 19 all-time closing high. Both the S&P 500 and the Nasdaq ended a win streak at four consecutive days with the session’s loss.
For the week, the Dow is up 3.5%, the S&P 500 is up 2.3% and the Nasdaq is on pace for a weekly gain of 1.3%, as of Thursday’s close.
What’s driving the market?
The U.S. May unemployment rate fell to 13.3% from 14.7%, though the Bureau of Labor Statistics said the rate would have been 3 points higher if households had answered their forms correctly. The loss of jobs in April was revised up to 20.7 million from 20.5 million.
Economists polled by MarketWatch had predicted the loss of 7.25 million jobs and a May unemployment rate of 19%.
“This a mind-blowing number and shows that the economy is improving. Things are not as bad as many thought. This data, if it is a true reflection of the economy, is likely to speed up the recovery for the US economy,” said Naeem Aslam, chief market analyst at AvaTrade.
Government financial relief measures to limit the harm from business closures have helped to support the economy and stock prices since they fell to lows in late March. Talk of additional funds from Congress could also deliver a fresh fillip to the risk assets, with Bloomberg News reporting that the Trump administration is considering a proposal that would see $1 trillion or more in a further round of economic stimulus that could include funds for infrastructure spending. Still, it is unlikely that such measures would occur until later in the summer, if at all, as lawmakers go on a recess.
The U.S. government has injected some $3 trillion in stimulus into the economy, while the Federal Reserve’s balance sheet rose to $7.21 trillion as of June 3, amid efforts to mitigate the severity of the economic downturn wrought by forced closures intended to limit COVID-19’s spread.
Those measures have been often cited as one of the key reasons that provided a runway for stocks to climb from the depths of the coronavirus selloff.
Outside of the labor-market report, a report on consumer credit for April will be released at 3 p.m. Eastern.
Which stocks are in focus?
- Slack Technologies Inc. WORK, -4.91% revenue topped $200 million in a quarter for the first time, but the stock still sank hard in the extended session Thursday afternoon after closing at record highs in recent days. Shares were down nearly 15% in premarket trade.
- PagerDuty Inc. PD, -4.94% shares were down 5.8% before the bell Friday after the digital operations-management platform reported fiscal first-quarter results that exceeded Wall Street estimates.
- Shares of DocuSign Inc. DOCU, -5.01% were off 0.7% in premarket action after the company’s latest results showed a boost from companies that were looking for digital ways to execute agreements as the COVID-19 crisis made in-person meetings more difficult.
- Broadcom Inc. AVGO, -0.20% reported results late Thursday that were in line with Wall Street estimates and its outlook range bookended the analyst consensus. Shares were up 2.6% in premarket trade.
- Shift4 Payments Inc. priced its initial public offering at $23 a share Thursday night, above its expected range of $19 to $21 a share.
- Shares of American Airlines Group Inc. AAL, +41.09% continued to surge Friday, and Raymond James analyst Savanthi Syth suggests enough is enough, as she turned bearish on the air carrier. “Taking into consideration the additional debt during the current crisis, we view AAL as priced close to perfection,” she wrote.
How are other assets trading?
Oil prices climbed Friday morning as OPEC+ set a tentative date for a meeting.
In precious metals, August gold GCM20, -1.96% on Comex slid 2%.
In global equities, the Stoxx Europe 600 index SXXP, +1.73% rose 1.7%, while the FTSE 100 index UKX, +1.59% added 2.1%.
In Asia, Japan’s Nikkei NIK, +0.74% rose 0.7%, the China CSI 300 000300, +0.47% finished 0.4% higher and Hong Kong’s Hang Seng Index HSI, +1.65% rose 1.8%. South Korea’s Kospi index 180721, +1.42% gained 1.4%.
The 10-year Treasury note yield TMUBMUSD10Y, 0.922% added 11 basis points to 0.925%, according to Dow Jones Market Data. Bond prices move in the opposite direction of yields.
The greenback gained 0.2% against its major rivals, gauged by the ICE U.S. Dollar index DXY, +0.27%.
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