(Bloomberg) — The stock market cheered a better-than-estimated jobs report, which added to evidence the world’s largest economy is recovering. Treasury yields sank.
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All major equity benchmarks traded at records, with the S&P 500 set for its fifth consecutive weekly rally — the longest winning streak since August 2020. The Nasdaq 100 rose for a 10th straight day, though technology firms underperformed industrial, financial and commodity shares. Stocks also gained after Pfizer Inc. said its Covid-19 pill reduced hospitalizations and deaths in high-risk patients by 89%, a result that has the potential to alter the course of the pandemic.
The U.S. labor market got back on track in October, with a larger-than-forecast and broad-based payrolls gain, indicating greater progress filling millions of vacancies as the effects of the delta variant faded. Nonfarm payrolls increased 531,000 after large upward revisions to the prior two months. The unemployment rate fell to 4.6%, while the labor-force participation rate was unchanged. Average hourly earnings came in line with estimates, rising the most since February.
“The strong jobs report is a welcome sign that the delta wave-driven slowdown was indeed transitory,” said Matt Peron, director of research at Janus Henderson Investors. “This bodes well for the expansion, which is set to continue in the coming months, driving earnings and economically sensitive sectors higher. We are still relatively early in this cycle.”
Federal Reserve Bank of Kansas City President Esther George said bottlenecks contributing to high inflation will persist well into 2022 amid broadening price pressures, suggesting officials should not wait too long to respond. The central bank will begin reducing the bond-buying program this month, but Chair Jerome Powell said Wednesday there’s “no direct signal” that should be taken about rate hikes from the taper decision.
More comments about the jobs report:
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“The strong October jobs report confirmed the Federal Reserve’s decision this week to begin tapering its monthly asset purchases, as it’s become clear that the economy isn’t in need of such massive support from the central bank,” said Jay Pestrichelli, chief executive officer at ZEGA Financial.
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“The release is affirmation that the economy is on the right footing, and there exists a possibility that the Santa Claus rally could be one of the strongest in recent memory,” said Peter Essele, head of portfolio management for Commonwealth Financial Network.
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“The stock market wants to see a goldilocks environment of job market and economic growth, with a relaxation of inflationary pressures,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.
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“The Fed appears comfortable with the economy right now, and today’s jobs report validated that optimism. Equities continue to be the default asset class,” said David Donabedian, chief investment officer of CIBC Private Wealth U.S.
Read: Hiring Trouble Ahead for U.S. Firms as Labor Supply Stays Weak
Read: House Moves Toward Votes on Biden Economic Plan, Infrastructure
Some other corporate highlights:
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Sports-betting company DraftKings Inc. reported third-quarter sales that missed Wall Street estimates, due in part to unfavorable NFL game outcomes.
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Peloton Interactive Inc. cut its annual revenue forecast by as much as $1 billion and lowered its projections for subscribers and profit margins, underscoring the fitness company’s struggles to adjust to a post-pandemic economy.
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Airbnb Inc. reported earnings that beat analysts’ estimates, proving the vacation-rental giant’s resilience even as the delta variant of Covid-19 prompted new travel concerns and restrictions.
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
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The S&P 500 rose 0.7% as of 11:15 a.m. New York time
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The Nasdaq 100 rose 0.6%
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The Dow Jones Industrial Average rose 0.9%
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The Stoxx Europe 600 rose 0.2%
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The MSCI World index rose 0.4%
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The Russell 2000 Index rose 1.6%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro fell 0.2% to $1.1528
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The British pound fell 0.2% to $1.3470
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The Japanese yen rose 0.1% to 113.61 per dollar
Bonds
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The yield on 10-year Treasuries declined six basis points to 1.47%
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Germany’s 10-year yield declined five basis points to -0.27%
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Britain’s 10-year yield declined nine basis points to 0.85%
Commodities
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West Texas Intermediate crude rose 2.4% to $80.74 a barrel
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Gold futures rose 0.6% to $1,803.90 an ounce
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