What’s happening: The Nasdaq 100 surged to a new record intraday high on Friday following the US Labor Department’s strong jobs report for May.
What happened: US stocks climbed during Friday’s session after the jobs data surprised markets with the strongest monthly gains in jobs on record and a decline in the unemployment rate.
May’s jobs data came as a promising sign that the US economy had started to stabilise after the damage caused by the coronavirus-related business shutdowns. The Nasdaq 100 was the first major index to respond and spiked to a new record high, erasing all its losses resulting from the Covid-19-induced sell-off on rising hopes of the economy rebounding smoothly.
The strong jobs report fuelled some concern, however, regarding the Federal Reserve deciding to reduce its support as the economy recovers.
Why it matters: Wall Street had crashed into bear territory in March, when the coronavirus outbreak began in the US. With the economy now starting to reopen after months of lockdown, investors are hopeful of a steady revival in business activity.
These hopes were further fanned by the US Labor Department’s report showing that the US economy added 2.5 million jobs in May, versus forecasts of 8.3 million job losses. The unemployment rate also tumbled to 13.3% in the month, significantly better than the expectations of a rise to 19.5%.
The jobs data followed the initial jobless claims report, which showed that around 1.9 million people had filed for unemployment benefits for the first time in the latest week. This marked the ninth consecutive week in which the pace of new claims had slowed.
Friday’s jobs report boosted index trading, with speculations of the pandemic’s impact on the economy coming to an end sooner than anticipated.
The Nasdaq 100 jumped 2.1% to settle at 9,814.08 on Friday, after spiking to a record intraday high of 9,842.49. The index ended the session only 3.1 points short of its highest close on record.
The S&P 500 gained 2.6% to 3,193.93, while the Dow Jones index climbed 3.2% to 27,110.98 on Friday.
While Nasdaq 100 erased all losses due to the coronavirus-led sell-off, the S&P 500 is down merely 1% year to date and just 6% shy of its all-time high. The Dow Jones is 8% lower than its record high.
The US dollar also gained some momentum following its latest run of losses. The greenback recovered some losses versus the euro on Friday to finish at 1.1291 in New York, after falling below 1.1300 in the Asian session.
What to watch: The stock index futures are trading higher this morning, signalling a positive open on Wall Street. With no major data scheduled for release today, the Federal Reserve's monetary policy meeting will remain in focus. Investors will also keep an eye on weekly data for jobless claims, consumer sentiment and consumer prices during the week.
Investors will also continue to focus on the coronavirus numbers, with total cases climbing past 7 million globally. The US has so far confirmed around 1,940,460 cases with around 110,500 deaths.