Dow Jumps 250 Points To Close Above 30,000 Again As Stimulus Talks Progress After Grim Jobs Report

Topline

Stocks pushed higher on Friday after a worse-than-expected jobs report helped bolster the case for additional stimulus–for which talks have recently reignited in Washington as the economy begins to slow ahead of the holiday season.

Key Facts

The Dow Jones Industrial Average jumped 249 points, or 0.8% on Friday, closing above the 30,000-point threshold for only the second time ever; the S&P 500, meanwhile, added 0.9%, while the tech-heavy Nasdaq edged up 0.7%.

Typical outperformers in the post-election market, energy firms by far led gains in the S&P, with Occidental Petroleum soaring 13%, while Marathon Oil and Apache each surged roughly 10.5%.

Shares of DocuSign also rallied, ending the day up 5% after the firm reported top-and-bottom line beats in the third quarter including revenue that surged by more than 50%.

Despite reporting a comparable sales increase of 18%, shares of Big Lots tanked 11% on Friday after the firm’s CEO business should “moderate” in the winter “given the elongated season,” though he also pointed to a strong start to the fourth quarter thanks to an early start to holiday shopping. 

Pet retailer Petco Health and Wellness officially filed to go public on Thursday in an initial public offering that could raise $800 million, revealing $3.3 billion in debt and nearly $3.6 billion in revenue this year through the end of October.

Global markets were similarly tepid on Friday, with Japan’s Nikkei 225 ending the day down 0.2%, while the United Kingdom’s FTSE 100 ticked up 0.9% and France’s CAC 40 climbed 0.6%.

Tangent

The United States added 245,000 jobs in November, according to data released by the Labor Department on Friday—roughly 45% less than economists expected as new forecasts suggest employment won’t return to pre-pandemic levels until 2024 and many jobs lost during the pandemic could be gone forever. 

Crucial Quote 

“The stock market is currently riding purely on technicals and nothing else,” said James McDonald, the CEO of Los Angeles-based Hercules Investments on Friday morning–after the disappointing jobs report. “If we see a correction in the near-term, it will be due to a temporary exhaustion from the record run-up in stocks since the November 3 elections.” Potential catalysts for near-term stock market corrections, he said, include “the risk that a vaccine will take longer-than-expected to deploy and its inability to stave off the winter wave of case spikes.” Experts have started to warn that the market is priced for perfection on the vaccine front.

What To Watch For

Stimulus talks. Vital Knowledge Media Founder Adam Crisafulli said the lackluster employment report should help bolster negotiations for relief in Washington–which have made solid progress this week. House Speaker Nancy Pelosi (D-Calif.) and Treasury Secretary Steven Mnuchin agreed on Wednesday that a $908 billion fiscal stimulus blueprint introduced by lawmakers on Tuesday should be a “starting point” for negotiations “This represents an ostensibly large compromise on their part, although the gap between the major principals is still large,” Crisafulli said Thursday. “It remains likely some stimulus items will get tucked into the upcoming budget bill, but a large initiative will have to wait until after the Georgia runoffs on January 5–and President-elect Joe Biden’s inauguration.”

Further Reading

10.9 Million Americans Are Still Unemployed, Rate Ticks Down To 6.7% But Job Market Could Take Years To Recover (Forbes)

Delta And Spirit Airlines Warn Of Slowdown Amid Covid Resurgence, And Stocks Are No Longer Rallying (Forbes)

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