AP – Wall Street closed out a winning week on Friday as the S&P 500 notched its fifth gain in a row and its biggest weekly increase since November.
The benchmark index rose 0.4 per cent and ended the week 4.6 per cent higher, more than making up for its decline in January. The latest gain nudged the S&P 500 to another all-time high. The Nasdaq composite also capped the week with a record high. Small-company stocks fared even better than the broader market, a sign that investors are feeling more optimistic about the economy.
The market largely shrugged off a dismal jobs report for January that showed the United States (US) economy remaining in dire straits due to the pandemic. Investors have been focussing instead on the prospects for another economic boost from Washington. Overnight, the Senate narrowly passed a measure that will fast-track aid.” It looks as if the Democrats are moving ahead with or without support from Republicans, and that’s helping the market’s tone,” said Prudential Financial Chief Market Strategist Quincy Krosby.
Surprisingly good company earnings reports, news that a recent surge in new coronavirus cases is easing, and progress in the distribution of vaccine, have also helped keep investors in a buying mood, she said.
The S&P 500 index rose 15.09 points, or 0.4 per cent, to 3,886.83. Its weekly gain is its biggest since November. The Dow Jones Industrial Average gained 92.38 points, or 0.3 per cent, to 31,148.24. The Nasdaq rose 78.55 points, or 0.6 per cent, to 13,856.30.
The Department of Labour said on Friday that employers added only 49,000 jobs in the month of January, far below economists’ forecasts. The disappointing report came as much of the country remains saturated with coronavirus cases.
“It’s very consistent with data over last two months which show that job growth is slowing,” said Wells Fargo Investment Institute Senior Global Market Strategist Sameer Samana.
Service industries continue to be the hardest hit by the pandemic as people continue to refrain from travel and dining out, among other activities.
“In some ways it seems the re-opening economy is still struggling a little bit and it’s responsible for quite a few jobs,” Samana said.
The Russell 2000 index of smaller company stocks climbed 30.91 points, or 1.4 per cent, to 2,233.33, a record high. When the Russell outpaces other indexes it’s a sign that investors are growing more confident about the economy’s growth prospects. The yield on the 10-year Treasury rose to 1.17 per cent from 1.12 per cent on Thursday.
Gains in communications stocks and companies that rely on consumer spending helped lift the market, outweighing a decline in technology sector stocks.
Meanwhile, companies that online investors have clambered to over the past few weeks continued to trade with heavy volatility. GameStop jumped 19.2 per cent to USD63.77. That’s far below the high of USD483 it reached last week but still well above the USD17 it traded at near the beginning of the year.
The rally in GameStop may have been spurred by Robinhood’s move on Friday to lift all the restrictions the online trading platform had placed last week on trading in the stock and shares of a few other companies that were hyped on social media and Internet forums.