Wall Street turned the page on a painful May in the stock market by notching its best week since late November last year.
Stocks on Friday climbed for a fourth consecutive day, capping a week of gains that reversed most of the losses last month, when US President Donald Trump’s tariff threats escalated trade wars with China and Mexico.
The latest rally came as investors welcomed a report showing that the US added fewer jobs than expected last month. The lackluster snapshot of hiring appeared to increase the odds that the US Federal Reserve will have to cut interest rates in the coming months.
Stocks surged earlier this week when Federal Reserve Chairman Jay Powell said that the central bank would “act as appropriate” if the trade disputes threatened US economic expansion.
The lackluster jobs report could signal growing caution by businesses as economic growth slows and the US engages in multiple trade conflicts.
“It’s a strange market right now,” said Gene Goldman, chief investment officer and director of research at Cetera Financial Group. “The markets are taking bad news as good news as reason to rally.”
The S&P 500 on Friday rose 29.85 points, or 1.1 percent, to 2,873.34, a surge of 4.4 percent from 2,752.06 on May 31 for its first weekly gain in five weeks and its best weekly gain since the week of Nov. 26.
The Dow Jones Industrial Average on Friday gained 263.28 points, or 1 percent, to 25,983.94, rocketing up 4.7 percent from 24,815.04 a week earlier. It had briefly been up 352 points.
The NASDAQ Composite on Friday climbed 126.55 points, or 1.7 percent, to 7,742.10, jumping 3.9 percent from a close of 7,453.15 on May 31.
The Russell 2000 index of smaller companies on Friday picked up 10.85 points, or 0.7 percent, to 1,514.39, an increase of 3.3 percent from 1,465.49 a week earlier.
Bond prices rose, pushing yields lower, a sign that the market is worried about slower economic growth. The yield on the 10-year US Treasury on Thursday fell from 2.12 percent to 2.08 percent.
That hurt banks, which rely on higher yields for profit from loan interest. Citigroup Inc slid 1.2 percent.
Most other sectors climbed on Friday. Technology stocks led the gainers.
Microsoft Corp rose 2.8 percent and Apple Inc added 2.7 percent.
Healthcare companies and Internet stocks were also among the largest gainers. Johnson & Johnson rose 1.4 percent, Facebook Inc climbed 3 percent and Twitter Inc added 3.7 percent.
Retailers notched solid gains, led by Foot Locker Retail Inc, which climbed 3.3 percent. Ross Stores Inc closed 3.1 percent higher.
Analysts were more confident that the Fed is closer to cutting rates as it gauges the latest weak employment data and downward revisions for previously reported data.
The US Department of Labor said that US employers last month added just 75,000 jobs, adding that hiring in March and April was not quite as robust as originally reported.
“The stock markets are banking on the Fed’s ability to step in and save the day, as it has for much of the last decade,” Cornerstone Wealth director of investments Cliff Hodge said.
The next rate cut could come as early as next month, he said, as the slide in bond yields signals that investors are preparing for slower economic growth.
While investors welcome the idea of a rate cut, such a move would suggest that the central bank is worried about the economy, which would not be good for the labor market, Wells Fargo Investment Institute senior global market strategist Sameer Samana said.
“We would view that as a sugar high as opposed to what the market really needs in order to make meaningful new highs driven by fundamentals,” Samana said. “Especially today, with the market now back close to 2,900, our two cents for investors would be that the risk outweighs the reward.”
Investors were also optimistic about prospects for a US-Mexico trade deal. The US is poised to start imposing 5 percent tariffs on Mexican goods tomorrow, but both sides are negotiating and media reports have suggested that the US could consider delaying the tariffs.
Even with this week’s gains, several sectors have a ways to go before they make up the losses they suffered last month as the trade disputes escalated.
The technology-heavy NASDAQ is still down 5.2 percent from its record on May 3.
Facebook and Google parent Alphabet Inc dragged down the Internet-heavy communications sector over the past month. It is down 7.5 percent from its April 29 high, the worst drop of any S&P sector.
Consumer-focused stocks are down 4.6 percent, with a large portion of companies depending on China for significant revenue.
On Friday, traders showed a hearty appetite for Beyond Meat, driving its shares 39.3 percent higher, after the plant-based meat maker beat Wall Street’s first-quarter financial forecasts.
The company also gave investors a solid revenue forecast for this year. At about US$138, Beyond Meat’s stock price is now more than five times greater than the US$25 offering price of its May 2 initial public offering.
Barnes & Noble Inc rose 11.1 percent after the last of the big book retailers announced its sale to a hedge fund for US$476 million. Elliott Management Corp is expected to complete the buyout in the third quarter.
The chain was blamed for the demise of independent bookstores and was ultimately laid low by the shift to online sales and Amazon.com Inc’s rise.
Additional reporting by staff writer
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