On Friday, the stock market rallied as the U.S. experienced a surge in jobs and offered a glimpse of hope that the American economy may be starting to recover from the COVID-19 pandemic. The economy added 2.5 million jobs in May, a record-gain. Meanwhile, according to the Labor Department, unemployment fell back down to 13.3 percent.
The report boosted economic confidence among traders. JJ Kinahan, a TD Ameritrade chief market strategist, said: “We’re having an unbelievable day!”
The Dow Jones Industrial Average soared 829.16 points, up 3.1 percent, to 27,110.98. The Dow had fallen by 34.6 percent earlier in the year. Overall for the week, the Dow was up by 6.8 percent.
Meanwhile, after falling by 25 percent earlier in the year, the tech-heavy Nasdaq climbed back to a record high of 9,814.08. The Composite jumped 2.0 percent, or 198.27 points, and had an intraday record at 9.845.69. The Nasdaq ended the week 3.4 percent higher.
The S&P 500 also rose to 3,193.93, 2.6 percent higher than the previous trading session, and 4.9 percent higher for the week. Overall, the S&P 500 is just 1.1 percent lower for 2020, thus far.
Jim Cramer on Squawk Box commented, “We’re back. I think there were a lot of people who felt that the layoffs would be permanent, and it’s obvious that there’s so much demand that people have to bring people back.”
Economists had previously forecast that eight million jobs would be lost, and unemployment would reach 20 percent.
But as Chief Market Strategist Drew Matus points out, “The unemployment rate was solid. The participation rate was higher. This checks all the boxes for a solid report,” Matus, who works at MetLife Investment Management, said. “So even though this was coming off a horrendous report the previous month, there’s nothing that screams this is some sort of error that can be ignored. If anything, it suggests we should be looking for more good news next month.”
With lockdowns being lifted, the airline industry saw its own lifts in shares, with American Airlines shares rising 11.1 percent on Friday, and United Airlines shares gaining 8.5 percent. The cruise industry also gained momentum as Royal Caribbean stock gained 20.3 percent, and Carnival Cruise Lines shares rose by more than 14 percent.
The retail sector also saw gains. Simon Property rose by 15.4 percent and Nordstrom, and Kohl’s shares went up by 6 percent and 11 percent, respectively.
Bank stocks also soared after struggling during the pandemic. Wells Fargo, Citigroup, Bank of America, and JP Morgan shares all went up by at least 4 percent.