Stocks soared Monday, powering the Dow and the S&P 500 to closing highs. The jobs report on Friday, when the market was closed, was a corker.
Stocks rose sharply Monday, as markets traded on a blowout jobs report Friday, when the stock market was closed. Both the Dow Jones Industrial Average and the S&P 500 index closed at records.
The Dow rose 374.98 points, or 1.13%, to close 33,527.19. The S&P 500 surged 58.04 points, or 1.44%, to end at 4,077.91, and the Nasdaq Composite soared 225.49 points, or 1.67%, to close at 13,705.59.
The biggest gainer in the S&P 500 was Norwegian Cruise Line Holdings (ticker: NCLH), which saw shares leap 7% after the company asked federal health authorities to let it sail from U.S. ports starting July 4.
“Futures are modestly higher on momentum from Friday’s strong jobs report,” wrote Sevens Report Research founder Tom Essaye in a Monday morning note.
The employment report was overwhelmingly strong. The U.S. economy added 916,000 jobs in March, topping the expected 675,000, and a jump from the February reading of 468,000. The unemployment rate is now down to 6%, according to the Bureau of Labor Statistics, a steep drop from the roughly 13% hit last year. The jobs report confirms the economy’s fast recovery as states reopen and trillions of fiscal stimulus dollars support businesses’ ability to rehire workers.
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“It reinforces the thesis that the economy is continuing to rebound,” Quincy Krosby, chief market strategist at Prudential Financial, told Barron’s.
Value stocks, which are more correlated to changes in the economy than growth stocks, had a strong day. The Vanguard S&P 500 Value Index ETF (VOOV) rose 1.0%. Oil and bank stocks hardly participated in the rally, with the Energy Select Sector SPDR ETF (XLE) down 2.4% and the SPDR S&P Bank ETF (KBE) up just 0.2%. That’s because the price of crude oil fell 4.4% to $58.77 a barrel, while long-dated interest rates fell a tick, with the 10-year Treasury yield down to 1.71%. Banks become more and less profitable with changes in longer-term lending rates, which are impacted by the yield on safe treasury bonds.
One reasons the yield fell is because it already rose on Friday after the jobs report, even though stock markets were closed to trading. The yield, which reflects the expected rate of inflation and movements in economic demand, hit above 1.72% Friday. It has almost doubled this year.
But the slight drop-off in the long-term rate helped power shares of growth companies, which expect to see the bulk of their profits come farther into the future and are more sensitive to changes in rates. The Vanguard S&P 500 Growth Index ETF (VOOG) rose 2.0%. Tesla (TSLA), the electric-vehicle giant that is one of the most high-profile growth companies, saw shares rise 4.4%, on strong first-quarter deliveries.
Next on investors’ radar: first-quarter earnings season.
Write to Jacob Sonenshine at jacob.sonenshine@barrons.com
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April 06, 2021 at 03:56AM
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Why Did the Market Rise? Strong Jobs Data Mean Record Stock Prices - Barron's
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