By: Ella Koeze·Data delayed at least 15 minutes·Source: FactSet
Wall Street snapped its losing streak on Friday after a surprisingly good reading on the American job market refocused investor attention to the brightening outlook for economic growth.
The S&P 500 gained 2 percent, more than reversing Thursday’s 1.3 percent tumble and leading the benchmark to a slight weekly gain after two consecutive weeks in the red.
The rise came after new data showed that the pace of hiring picked up in the United States in February, when the economy created 379,000 new jobs, well above forecasts of roughly 200,000. Parts of the economy that were hard-hit by the Covid crisis — such as leisure and hospitality — bounced back during the month.
On the other hand, the report also contained indications that parts of the economy remain troubled. For instance, the broadest measure of unemployment remained unchanged at 11.1 percent.
“The U.S. labor market is beginning to heal,” economists from Bank of America wrote in a client note on Friday. “However, the preponderance of labor market indicators suggest there is still work to be done.”
Such a situation — with the economy growing but not going gangbusters — seemed to be just want the market wanted see.
Industries tied to the short-term outlook for economic improvement led Friday’s gains. Energy stocks were the top-performing part of the S&P 500, up about 3.9 percent, after the Organization of the Petroleum Exporting Countries decided yesterday to keep a tight lid on supplies of crude oil. Prices for American crude oil climbed 3.5 percent to more than $66 a barrel.
Companies positioned to benefit from the Biden administration’s effort to boost spending fared well on Friday. Engineering and construction firm Granite Construction, which specializes in civil and transportation infrastructure projects, jumped about 4.5 percent. Another engineering, construction and maintenance firm, Dycom, jumped more than 7 percent.
The tone on Wall Street on Friday was distinctly different from recent weeks, when signs of growth, somewhat counter-intuitively, have been a source of consternation to the market.
That was largely because growth is sometimes accompanied by rising prices. And the Federal Reserve, which is responsible for keeping prices under control, has traditionally raised interest rates to cut off the chance that the economy broad-based price surge, known as inflation.
A recent rise in yields on Treasury bonds reflected growing expectations that the Fed could raise rates sooner than many had previously expected.
Low rates are a boon to the stock market. The Fed’s decision to cut rates to near zero in March 2020 was effectively the starting point for a…
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