Stocks closed higher at the end of a choppy trading day after the Labor Department's February jobs report handily exceeded expectations, reaffirming the building momentum in the economic recovery, but also stoking a rise in Treasury yields and concerns over an economic overheating.
The S&P 500 and Dow each rallied in the final hour of trading, shaking off earlier declines and ending three-session losing streak. The Nasdaq also pared earlier losses to push higher, as technology stocks badly beaten down over the last several sessions recovered some declines. Still, the index posted its third straight weekly loss after enduring three consecutive sessions of steep drops earlier this week.
The 10-year Treasury yield rose to about 1.6%, hovering around a one-year high after the Labor Department's February jobs report showed the economy made additional strides to bring back payrolls early this year, with jobs rising by a better-than-expected 379,000 during the month.
“An above average payroll report (+379k), upward revisions, and a falling unemployment rate (to 6.2%) point to continued recovery. Markets will remain concerned that the potentially massive impact of a $1.9 trillion fiscal relief package could turbo charge the recovery later in the year, and spill into higher inflation," David Donabedian, chief investment officer of CIBC Private Wealth, wrote in an email Friday morning. "A 355,000 gain in the leisure and hospitality sector suggests that the economy is re-opening from COVID lockdowns, with more expected in the months ahead."
Federal Reserve Chairman Jerome Powell suggested Thursday that the central bank would remain “patient” with holding benchmark rates near zero, even in the face of rising inflationary pressures. Some investors have worried that the massive stimulus passed by Congress – with another $1.9 trillion stimulus package currently up for debate in the Senate – alongside ultra-accommodative monetary policy may be stoking an even faster-than-expected economic recovery, which could lead to a runaway surge in prices.
Technology stocks have especially borne the brunt of this week's leg lower in equity markets, as investors unwound their positions in high-growth stocks in favor of shares of companies with earnings more closely tied to a strong economic recovery. The Nasdaq dipped into correction territory intraday on Thursday, falling more than 10% from a recent record closing high.
“I think what has spooked investors is two things: One is the speed with which we got from essentially just below 1% to 1.5% [in the 10-year Treasury yield] in the first two months of the year. Forecasts were certainly for getting to this level, and up to as high as 2%, by the end of the year, but it happened rather quickly,” Tony Rodriguez, Nuveen head of fixed income strategy, told Yahoo Finance.
“And then I think also, it’s the positive information that we’ve gotten in terms of fiscal policy, in terms of actual economic data and in terms of the successful, or really sped-up rollout of the vaccine leading to much much more positive projections for growth," he added. "And that’s spooked investors, in terms of whether the Fed is going to have to respond by potentially tightening soon."
4:02 p.m. ET: Stocks end higher, rallying into the close and shaking off earlier losses
Here's where the major indexes ended Friday’s session:
S&P 500 (^GSPC): +73.31 points (+1.95%) to 3,841.78
Dow (^DJI): +573.80 points (+1.86%) to 31,497.88
Nasdaq (^IXIC): +196.68 points (+1.55%) to 12,920.15
2:59 p.m. ET: Robinhood selects Nasdaq for eventual initial public offering: CNBC
Popular online brokerage Robinhood has selected the Nasdaq over the New York Stock Exchange for its eventual initial public offering, CNBC reported Friday, citing unnamed people familiar with the matter.
To date, Robinhood has not officially filed to go public. The company has been at the center of much debate over the role it played in the speculative, retail investor-fueled run-ups of stocks including GameStop and AMC.
12:34 p.m. ET: Stocks trade mixed, paring earlier losses
Here's where markets were trading Friday afternoon:
S&P 500 (^GSPC): +17.86 points (+0.47%) to 3,786.33
Dow (^DJI): +199.14 points (+0.64%) to 31,123.28
Nasdaq (^IXIC): -30.72 (-0.24%) to 12,689.58
Crude (CL=F): +$2.01 (+3.15%) to $65.84 a barrel
Gold (GC=F): -$2.50 (-0.15%) to $1,698.20 per ounce
10-year Treasury (^TNX): +1.4 bps to yield 1.564%
12:00 p.m. ET: Chamath Palihapitiya exits personal position in Virgin Galactic, selling $213 million in shares
Venture capitalist Chamath Palihapitiya sold his remaining personal position in commercial space exploration company Virgin Galactic (SPCE), according to regulatory filings on Friday, two years after he helped bring the company public through a merger with a special purpose acquisition company (SPAC). He sold 6.2 million shares worth about $213 million.
Palihapitiya is still chairman of the company, and retails an about 6.6% stake in Virgin Galactic via an investment firm.
Shares of Virgin Galactic sank by more than 14% intraday on Friday following the filings.
11:43 a.m. ET: Stocks drop, erasing earlier gains
The three major indexes fell Friday intraday, turning negative after rising earlier in the session.
The Dow dipped after gaining as many as 334 points, or 1%, earlier on in the session. The S&P 500 dropped 0.5% as the Amazon and Tesla-heavy consumer discretionary sector heavily underperformed, alongside the rate-sensitive real estate and information technology sectors. Energy and consumer staples outperformed.
The Nasdaq fell by more than 1.5%, extending this week's losses for the index and putting it on track to close in a formal correction, or at least 10% below its recent record closing high.
9:30 a.m. ET: Stocks open higher after strong jobs report
Here's where markets were trading shortly after the opening bell:
S&P 500 (^GSPC): +34.24 points (+0.91%) to 3,802.71
Dow (^DJI): +272.11 points (+0.88%) to 31,196.25
Nasdaq (^IXIC): +108.50 (+0.85%) to 12,831.6
Crude (CL=F): +$1.86 (+2.91%) to $65.69 a barrel
Gold (GC=F): +$3.50 (+0.21%) to $1,704.20 per ounce
10-year Treasury (^TNX): +4.2 bps to yield 1.592%
8:44 a.m. ET: February jobs report smashes expectations
The U.S. economy added back the most jobs in four months in February, as easing COVID-19 case counts and a ramping vaccine rollout allowed distancing restrictions to begin to moderate. The unemployment rate also unexpectedly improved during the month.
Non-farm payrolls rose by 379,000 in February, or well above the 200,000 expected. The unemployment rate dipped to 6.2%, unexpectedly improving compared to January's 6.3%. And the improvement in the jobless rate came even as the labor force participation rate steadied at 61.4%.
The February jobs report also included a notable upward revision to payrolls gains in January, but a downward revision to losses in December. January's payroll gain was revised up to 166,000 from the tepid 49,000 previously reported. However, December's payroll losses – the first since April — were revised to 306,000, from the 227,000 reported earlier. Altogether, the U.S. economy remains about 9.5 million payrolls short of its pre-pandemic levels.
7:25 a.m. ET Friday: Stock futures point to a mixed open
Here's where markets were trading ahead of the opening bell Friday morning:
S&P 500 futures (ES=F): 3,767.25, up 1.75 points or 0.05%
Dow futures (YM=F): 30,896.00, up 18 points or 0.06%
Nasdaq futures (NQ=F): 12,435.25, down 19.75 points or 0.16%
Crude (CL=F): $65.40 per barrel, +$1.57 (+2.46%)
Gold (GC=F): $1,692.60 per ounce, -$8.10 (-0.48%)
10-year Treasury (^TNX): +0.9 bps to yield 1.559%
6:01 p.m. ET Thursday: Stock futures trade mixed
Here's where markets were trading as the overnight session kicked off:
S&P 500 futures (ES=F): 3,765.00, down 0.5 points or 0.01%
Dow futures (YM=F): 30,890.00, up 12 points or 0.04%
Nasdaq futures (NQ=F): 12,435.75, down 19.25 points or 0.15%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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