Wall Street hits highs as slowing job growth spurs stimulus bets

(Reuters) – Wall Street’s main indexes rose to all-time highs on Friday as data showing the slowest U.S. jobs growth in six months raised investors’ expectations for a new fiscal relief bill to help revive the coronavirus-hit economy.

FILE PHOTO: The Fearless Girl statue is seen as the U.S. flag covers the front facade of the New York Stock Exchange (NYSE) in New York City, New York, U.S., November 9, 2020. REUTERS/Brendan McDermid/File Photo

So-called “cyclical” stocks seen as particularly sensitive to the economy, such as energy and industrials, lead the gains as most S&P 500 sectors rose.

“There’s clearly a cyclical rally, so it’s got to be attributable to rising optimism on the stimulus front,” said David Joy, chief market strategist at Ameriprise Financial in Boston.

The Labor Department’s closely watched report showed nonfarm payrolls increased by 245,000 jobs in November, below economists’ expectations of 469,000 jobs and the smallest gain since the labor recovery started in May.

U.S. President-elect Joe Biden said the November U.S. jobs report underlined the need for urgent action on coronavirus relief but that any package passed by Congress now would not suffice and that more would be needed in January.

“The bad news of the weakening jobs picture is potentially good news for investors because it means that the stimulus bill is much more likely to take place in a fairly short time frame,” said Ryan Detrick, senior market strategist at LPL Financial in North Carolina.

The Dow Jones Industrial Average rose 167.35 points, or 0.56%, to 30,136.87, the S&P 500 gained 22 points, or 0.60%, to 3,688.72 and the Nasdaq Composite added 59.79 points, or 0.48%, to 12,436.98.

The benchmark 10-year yield hit its highest level since March at over 0.98%, helping support financial shares which are highly sensitive to interest rates.

Energy shares were also bolstered by gains in oil prices, with shares of Diamondback Energy Inc up 11.6% and Occidental Petroleum up 10.7%.

Utilities lagged the most among major sectors, falling 1.5%.

Positive coronavirus vaccine updates from drugmakers have raised hopes for an economic recovery next year and overshadowed worries over a surge in U.S. infections, setting the major indexes up for another week of gains after the benchmark S&P 500 surged over 10% in November.

In company news, Boeing shares fell 1.9% as a top company executive said the company is reducing production of its 787 Dreamliner for the fourth time in 18 months.

Advancing issues outnumbered declining ones on the NYSE by a 3.18-to-1 ratio; on Nasdaq, a 2.55-to-1 ratio favored advancers.

The S&P 500 posted 47 new 52-week highs and no new lows; the Nasdaq Composite recorded 199 new highs and 6 new lows.

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