US stock indices posted their best weekly gain since the November election on Friday, despite the latest January employment update showing disappointing employment growth, suggesting that the labor market recovery is stalling.
On Thursday, the S&P 500 hit its sixth record close in 2021, while the Nasdaq hit its seventh record of the year and the Dow closed just 0.4% from its all-time high. Small capitalization focused on Russell 2000
climbed 1.8% and set a record.
During the week the Russell was up 7.6%, the Nasdaq was up 6%, the S&P 500 index was up 4.7% and the Dow was up 3.9%.
What drove the market?
The US Department of Labor's employment report found that 49,000 new jobs were created in January, while the unemployment rate fell from 6.7% to 6.3%.
The results confirm the view that the labor market recovery is stalling amid the COVID-19 pandemic that has hit the U.S. economy. Around 10 million jobs that disappeared in the early stages of the pandemic have still not returned.
"If you look at the US data [Nonfarm Payrolls] it becomes clear that the tremendous strength that we saw before in many areas is no longer there," wrote Naeem Aslam, chief market analyst at AvaTrade. "This means that US lawmakers can push really hard for the next second stimulus package," he wrote after the employment data was released.
The January report follows a December reading that found 140,000 jobs have been lost. This is the first monthly drop in employment in about eight months when the COVID-19 pandemic first struck the country.
The January report comes as many states re-introduced business restrictions late last year to fight the pandemic, and restaurants and hotels have had to lay off workers for the second or third time.
The employment situation is likely to be even worse than last month's work report reflects, say economists. Several million people who have left the workforce and lowered the unemployment rate have done so because they have not found work and are therefore not counted in the main unemployment rate.
Still, investors showed themselves on the back of good earnings by American companies in the second-biggest week of fourth-quarter results and the prospect of Congress passing President Joe Biden's $ 1.9 trillion coronavirus aid package through a special voting process , optimistic.
The Senate approved a 51-50 budget resolution early Friday that would enable a quick follow-up to the $ 1.9 trillion coronavirus relief plan.
One benefit of the softer employment data is that it could improve the outlook for more household spending under Biden.
"The biggest risk to the non-farm payroll report was a sharp recovery in attitudes that could hurt prospects for future fiscal stimulus," wrote Edward Moya, senior market analyst at Oanda, in a research note.
He notes that the slowness of the current recovery remains a key concern, as does a sluggish recovery that would have lasting effects on parts of the economy.
"There is economic scarring as the long-term unemployed remains around 4 million," Moya wrote.
See: Biden says he could deliver $ 1.9 trillion aid package without Republican support
Fears of a market correction that occurred last week and were inspired by a Reddit-led group of individual investors have given way to new gains. The rally for the top benchmarks is now getting them on their way to their best weekly earnings in about three months, according to FactSet data.
"US markets extended their recovery for the fourth straight year yesterday as the recent impact of the Reddit-inspired sell-off continued to wear off last week," wrote Mark Hewson, chief market analyst at CMC Markets, in a daily research report .
"Improvements in US economic data as well as the prospect of further fiscal stimulus helped support this week's rebound."
Meanwhile, Treasury Secretary Janet Yellen said regulators were ensuring investor protection after a month-long social media campaign of individual investors to increase the value of sharply-discounted stocks like GameStop Inc.
The popular trading app Robinhood Markets has lifted the last trading limit on shares in GameStop and AMC Entertainment Holdings
among other. The market volatility associated with responding to the retail frenzy has decreased significantly.
In the public health field, Johnson & Johnson
applied for emergency clearance for his single-shot COVID vaccine, which could result in Americans getting gunshots as early as March.
COVID-19 hospital stays continued to decline to 88,668 on Thursday, the lowest number since Nov. 24, according to the COVID tracking project. The number of deaths in the US as a result of the coronavirus that causes COVID-19 rose to over 5,000 for the first time on Thursday, sparking a downward trend.
In other economic reports, the US international trade deficit narrowed in December, but the country's trade gap still rose to its highest level in 12 years in 2020 due to the coronavirus pandemic. The trade gap narrowed 3.5% from $ 69 billion in November to $ 66.6 billion in December, the government said on Friday.
See also: The rotation is real, confirm January fund flows
Which stocks were in focus?
Shares of Regeneron Pharmaceuticals Inc.
Things took off easy on Friday after the company announced that its COVID-19 antibody cocktail treatment made $ 145.5 million in sales as part of its profits in the fourth quarter of 2020.
An advisory committee of the Food and Drug Administration will meet for a full-day meeting on February 26 to discuss Johnson & JohnsonJNJ COVID-19 vaccine candidate. J & J's shares were up 1.5%.
Estee Lauder company
reported a profit for the second quarter of the fiscal year that was well above expectations as revenues were also above projections but provided an optimistic outlook for the current quarter as a revival of COVID-19 has led to renewed government restrictions. The shares rose 7.8%.
Shares of Noble Midstream L.P. NBLX rose 6.7% on the Friday after Chevron Corp.
offered to buy the midstream infrastructure operator, already majority owned by Chevron, in a deal that valued Noble Midstream at approximately $ 1.13 billion. Chevron shares rose 0.3% on Friday.
China Luckin coffee Filed for Chapter 15 bankruptcy in New York. All of his coffee chains remain open, Luckin said in a statement.
Shares of Aurora Mobile Ltd.
rose 37% on Friday after the China-based mobile developer service provider entered into a partnership agreement with Kuaishou Technology, TikTok rival owned by China-based tech giant Tencent Holdings Ltd. TCEHY was announced to improve the efficiency of advertising monetization.
reported an unexpected gain in the fourth quarter. The shares rose 1.2%.
Late Thursday, the second quarter of the fiscal year announced the most profitable quarter since the company's restructuring more than seven years ago, despite quarterly revenue down 3% year over year. The shares rose more than 6%.
Peloton Interactive Inc..
achieved first quarter sales of over $ 1 billion but was weighed down by delays in shipping its products. The stock closed nearly 6% lower.
How have other assets performed?
The yield on the 10-year Treasury note TMUBMUSD10Y rose 2.5 basis points to around 1.172% from 1.090% last Friday. Yields and bond prices are moving in opposite directions.
The ICE US dollar index DXY, a measure of the currency versus a basket of six major competitors, fell 0.6% after rising nearly 0.5% so far this week.
The GCJ21 gold futures rose $ 21.80, or 1.2%, to $ 1,813 an ounce.
The oil futures rose against the US benchmark CL.1
Gaining 62 cents, or 1.1%, to settle on the New York Mercantile Exchange at $ 56.85 a barrel.
The Stoxx 600 Europe Index SXXP closed unchanged, while the London FTSE 100 UKX fell 0.2%.
In Asian trading, the Shanghai Composite SHCOMP fell 0.2% on Friday, the Hong Kong Hang Seng Index HSI fell 0.6% and the Japanese Nikkei 225 NIK fell 1.5%.