By Geoffrey Smith
Investing.com — U.S. stock markets roared ahead on Friday, shrugging off the biggest rise in unemployment in U.S. history, as investors took the view that April’s labor market report marks the worst of the pandemic’s impact on markets.
By 10:20 AM ET (1420 GMT), the Dow Jones Industrial Average was up 341 points, or 1.4% at 24,217 points, while the S&P 500 was up 1.2%. The Nasdaq Composite, which on Thursday erased its losses for the year and moved back into positive territory, also gained another 1.2%.
Earlier, the Bureau of Labor Statistics confirmed that nonfarm employment fell by 20.5 million in April, pushing the jobless rate up to 14.7% of the workforce. The broader U6 measure of underemployment rose to 22.8% of the workforce from 8.7% a month earlier.
“Today’s jobs report shows that shutting down the U.S. economy will create deep and long-lasting scars for America’s labor force,” said Josh Lipsky of the Atlantic Council think-tank. “It is clear there will be no ‘V’ shaped bounce back from the depths of this shock.”
Lipsky was critical of the rush to reopen the economy, arguing that a fresh wave of infections could lead to worse economic outcomes.
“With a large majority of Americans still reluctant to go out and spend, reopening too early will likely trigger higher infection rates without delivering a meaningful economic recovery — a double blow that could prolong the pain for America’s workers.”
However, two months of relentlessly negative news flow and the awareness of a comprehensive Federal Reserve backstop mean that investors are more inclined to trust in the recovery so far. Uber (NYSE:UBER) stock rose 4.8% after CEO Dara Khosroshahi said the pandemic would delay its goal of an operating profit by “quarters, not years”. Uber’s first-quarter loss widened to $2.94 billion in the first quarter as it wrote down a raft of unprofitable investments.
Walt Disney (NYSE:NYSE:DIS) stock rose 2.3% after the company said the reopening of its Shanghai theme park – capped by the authorities at 30% of capacity – had sold out immediately. Airlines and cruise line stocks, which have been roundly battered in the last two months, were also among the biggest gainers.
There was also better news from Detroit, with General Motors (NYSE:GM) stock rising 5.6% after raising $4 billion in senior unsecured debt, further bolstering its liquidity position after a first quarter that saw it conserve cash better than expected. Ford Motor (NYSE:F) stock also rose 3.8% after it said it aims to restart production at its North American factories from May 18. The company also said on Thursday that its two Chinese joint ventures had posted year-over-year sales gains in April.
Among the losers, Roku (NASDAQ:ROKU) stock fell 5.3% after the maker of streaming devices lowered its guidance for revenue and gross profit this year in response to a dismal first quarter for advertising. Its net loss widened in the first quarter due to higher subscriber acquisition costs and a drop in the advertising revenue on its free channel.
Stocks – Wall Street Jumps on Belief Worst Is Over After Jobless Surge
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