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Global stocks rise; Treasury yields rally after jobs report

1 year 3 months 19 hours ago Friday, April 02 2021 Apr 2, 2021 April 02, 2021 10:27 AM April 02, 2021 in News
Source: Associated Press

NEW YORK (AP) — Stocks rose in many of the markets worldwide that were open on Good Friday, while Treasury yields rallied after a report showed U.S. employers added hundreds of thousands more jobs last month than economists expected.

The U.S. bond market was open for an abbreviated session, and the yield on the 10-year Treasury climbed to 1.72% from 1.68% late Thursday. It’s been rising sharply this year on expectations that a supercharged economic recovery and higher inflation are on the way due to COVID-19 vaccinations and massive spending by the U.S. government. The yield began the year close to 0.90%.

In Asia, stocks in Tokyo, Seoul and Shanghai all rose a day after the S&P 500 passed the 4,000-point level for the first time. Many major stock markets were closed in observance of Good Friday, including in New York and much of Europe.

Futures for U.S. stock indexes rose, suggesting the S&P 500 may add to its record when trading resumes on Monday.

Friday morning’s U.S. jobs report was highly anticipated, and investors hoped it would show their expectations for a strong economic recovery were warranted. Hiring blew past expectations, with employers adding 916,000 more jobs than they cut last month. Economists had forecast growth of 617,500.

It was nearly double the jobs growth from February, and it was the strongest since August. The data helped S&P 500 futures climb 0.4%, following the 1.2% rise for the index on Thursday to an all-time high. Futures for the Dow Jones Industrial Average and Nasdaq 100 also climbed.

“This is about as clear as it gets, the reopening is happening faster than nearly anyone expected,” Ryan Detrick, chief market strategist for LPL Financial, said in a statement. He also pointed to how the U.S. government said hiring in January and February was stronger than earlier estimated.

The numbers reassured investors that a sustained recovery appears to be taking root as more people get vaccinated and businesses reopen. So too did a corner of the jobs report showing workers’ wages aren’t jumping yet, even as hiring accelerates.

Average hourly earnings dipped 0.1% in March from a month earlier, on a seasonally adjusted basis. While that’s frustrating for workers, it encourages investors who had worried that a burst of inflation may be on the way. If inflation were to shoot higher and remain there, it would likely send Treasury yields spiking even higher.

Higher interest rates make investors less willing to pay high prices for stocks, particularly those seen as the most expensive. They also hurt stocks of companies asking investors to wait many years for big profit growth to come to fruition. Such worries have hurt the momentum for big technology stocks in particular this year.

Helping to counterbalance such concerns in the stock market this year has been immense spending by the U.S. government, which investors expect to help boost corporate profits. President Joe Biden unveiled details of his latest push earlier this week, a $2.3 trillion plan to shore up the nation’s infrastructure.

In Asia, Tokyo’s Nikkei 225 index gained 1.6% to 29,854.00 on Friday. The Kospi in South Korea added 0.8% to 3,112.80, and stocks in Shanghai picked up 0.5% to 3,484.39.

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