Dow Ends 3.2% Higher On Positive US Jobs Data

Wall Street stocks surged on Friday following a surprisingly strong US jobs report, which markets viewed as validating recent gains and proving the economy is recovering.

The Dow Jones piled on nearly 830 points, or 3.2 percent, to finish the week at 27,110.

The S&P 500 jumped 2.6 percent to close at 3,193, while the Nasdaq climbed 2.0 percent to 9,814, narrowly missing an all-time high.

The gains capped a banner week for the market, which has risen steadily from March when stocks plunged following a series of shocking moves to shutter much of the US economy.

Since March, investors have looked past huge increases in unemployment, weakening consumer confidence and other grim indicators in anticipation of better times against a backdrop of massive stimulus from Washington.

The Labour Department reported the US economy regained 2.5 million jobs in May and the unemployment rate dropped as coronavirus pandemic shutdowns began to ease.

The report defied even the most optimistic expectations among economists, who had been expecting a payroll decline of more than eight million and a jobless rate of 20 percent or higher.

"There was a sense things were getting better around the economy and stocks rallied sharply in April and May," TD Ameritrade's JJ Kinahan said in a note. "Here in June, we just received a positive piece of news that might seem to justify at least some of the huge run-up since the March lows.

"The market isn't always right, but it sometimes turns out to be a pretty good forecaster."

But economists noted that unemployment of 13.3 percent was still above the level at the peak of the 2008 financial crisis and there are still risks of additional layoffs in struggling industries.

The rally especially propelled cyclical companies seen as benefiting from a rebound, including Caterpillar, up 4.8 percent, and airlines, as well as plane-maker Boeing, which surged 11.4 percent.

Another winner was Tiffany, which gained 6.5 percent on revived confidence its US$16.2 billion acquisition by LVMH was still on track.

Banking sources said that LVMH has not contacted Tiffany to renegotiate terms of the deal. (AFP)