Strong US jobs report sends stocks higher on Wall Street
Stocks were broadly higher in early morning trading Friday, as investors welcome news that hiring by U.S. employers picked up last month at the fastest pace since October, a potential sign of recovery from the more than year-long pandemic and economic malaise.
The S&P 500 index rose 0.5% as of 10:10 a.m. Eastern. The Dow Jones Industrial average rose 0.8% as the Nasdaq Composite was down 0.1%. On Thursday the S&P 500 briefly dipped into the red for the year and is on track for its third consecutive weekly loss.
U.S. employers added a robust 379,000 jobs last month, a sign that the economy is strengthening as confirmed viral cases drop, consumers spend more and states and cities ease business restrictions.
The February gain marked a sharp pickup from the 166,000 jobs that were added in January and the loss of 306,000 in December. Yet it represents just a fraction of the roughly 9.6 million jobs that the economy needs to regain to return to pre-pandemic levels.
The bond market, which has been betting on stronger economic growth as well as the potential for higher inflation, pushed bond yields higher. The yield on the 10-year Treasury note was trading at 1.60%, its highest level in more than a year. Only a week ago, markets reacted negatively to the 10-year note crossing the 1.50% mark.
Technology stocks continued their slow march downward as bond yields rise. Tech stocks tend to be more expensive than other stocks per dollar of earnings a company can generate, a concept known as the price-to-earnings ratio. Because tech stocks are pricier, they tend to sell off when bond yields become more attractive.
In contrast, bank stocks continued their climb higher as higher bond yields mean banks can charge higher interest rates on loans. Bank of America, Wells Fargo, Citigroup and JPMorgan Chase were all up 1% or more.
Investors were disappointed with remarks by Federal Reserve Chair Jerome Powell on Thursday when he said inflation will likely pick up in the coming months, though he cautioned that the increase would be temporary and would not be enough for the Fed to alter its low-interest rate policies.
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