- US stocks rallied Friday despite a disappointing November jobs report.
- US nonfarm payrolls grew by 210,000 last month — way below the median forecast of 550,000 jobs.
- The weak data raised investor hopes for a slower pace of tapering from the Federal Reserve.
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US stocks rallied Friday as a disappointing November jobs report raised investor hopes that the Federal Reserve will taper its bond purchases at a slower pace.
The benchmark S&P 500 extended its gains after rising modestly before the Labor Department’s monthly report. The Dow Jones Industrial Average also built on its gains after soaring 618 points Thursday.
Here’s where US indexes stood at the 9:30 a.m. ET open on Friday:
- S&P 500: 4,596.03, up 0.41%
- Dow Jones Industrial Average: 34,762.76, up 0.36%
- Nasdaq Composite: 15,382.83, up 0.01%
The US nonfarm payrolls grew by 210,000 last month — way below the median forecast of 550,000 jobs from economists surveyed by Bloomberg.
The reading showed hiring slowed dramatically from October’s revised gain of 546,000. November was expected to extend the fall’s healthy job growth after the Delta coronavirus variant hammered hiring through the summer.
Yet new headwinds stood in the way of blockbuster gains — among them, the new Omicron coronavirus variant and the ongoing supply-chain crisis.
“Friday’s weaker-than-expected jobs report adds to the fear we’ve seen this week with the Omicron variant and it may stoke fears of stagflation, which consists of slower economic growth and higher inflation,” Jay Pestrichelli, CEO of ZEGA Financial, an investment firm, said in a note. “Rising inflation may force the Fed’s hand faster than anticipated.”
Equities thus far have whipsawed this week as investors try to assess the threat of Omicron. The variant has prompted many economies to call for tighter travel restrictions, reminiscent of the height of the COVID-19 pandemic last year. So far, 10 Omicron cases have been detected in a number of US states.
“Given rate hikes on the horizon and a tightening of financial conditions, some caution is warranted, but if the economy continues to expand and inflation can be kept under control – two big necessary conditions – ultimately, this will be good for the stock market and bad for the bond market,” Chris Zaccarelli, CIO at Independent Advisor Alliance, said in a note. “So far, the two markets are in disagreement with both increasing in price, which means one of them is mispriced.”
The 10-year Treasury note yield rose to 1.456% from Thursday’s 1.447% rate. Bond yields move inversely to prices.
Elsewhere in the markets, electronic signature platform DocuSign fell as much as 32.5% after the company reported earnings the previous day that beat expectations, but issued downbeat fourth-quarter guidance.
Tech stocks in Hong Kong slid after ride-hailing giant Didi Global said it will delist its shares in the US, bowing to pressure from Beijing authorities. This includes e-commerce giant Alibaba, tech conglomerate Tencent, and shopping platform provider Meituan.
Crude oil rebounded sharply as traders took comfort from a signal from the world’s largest oil exporters that they will adjust their output if the threat to demand from the Omicron variant grows.
Gold fell as much as 0.18% to $US1,772.40 ($AU2,526) per ounce.