Wall Street jumps as historic job losses are less than expected

Despite historic coronavirus-induced job losses in the United States, Wall Street rose on Friday and ended the week with gains.

The Dow Jones Industrial Average rose 1.91 percent, to close at 24,331.32. The widely used gauge of US retirement and education savings accounts, the S&P 500, gained 1.69 percent. The tech-heavy Nasdaq Composite Index added 1.58 percent.

Market gains belie historic US job losses. The depth and breadth of the damage inflicted on the US economy by coronavirus lockdown measures came into sharp, painful focus on Friday with government figures showing a record 20.5 million Americans lost their jobs in April.

Data from the US Bureau of Labor Statistics also showed the unemployment rate skyrocketed to 14.7 percent last month – the highest since the Great Depression of the 1930s.

“You can see some silver linings in there,” said Brian Nick, chief investment strategist at Nuveen, pointing to the large number of temporary layoffs. “Except for the initial panic in the month of March, in general the markets are ignoring economic data for the most part and are looking more at data related to COVID-19.”

Stocks have staged a sharp rebound since late March from the coronavirus-fueled selloff, helped by massive monetary and fiscal stimulus.

“The stimulus is building that bridge at this point. I think that’s a very positive for the market,” said Craig Johnson, a senior technical research analyst at Piper Sandler. “What’s happening in the market, though, is I think people are sort of building a bridge to kind of look across this downturn in terms of the job losses and things … And I think investors are really now starting to look out to the 2021 numbers.”

Optimism for markets was also fed by news that US and Chinese trade representatives discussed their phase one trade deal, with China saying they agreed to improve the atmosphere for its implementation.

All 11 S&P 500 sectors were positive, led by the beaten-up energy group, which gained 4.3 percent.

Brent crude settled up 5.1 percent to close at $30.97 a barrel. US West Texas Intermediate crude futures (WTI) gained 5 percent to close at $24.74 a barrel. Both contracts posted a second week of gains, with Brent advancing over 18 percent this week and WTI up about 33 percent.

The S&P 500 posted 11 new 52-week highs and no new lows; the Nasdaq Composite recorded 64 new highs and three new lows.