Strong May Jobs Report Sends Dow Up 800+

John Divine

If someone told you at the beginning of 2020 that a sudden pandemic would hit, the economy would come to a virtual standstill for several months, second-quarter growth domestic product was expected to plunge 53%, and the unemployment rate would stand at 13.3% a week into June, would you expect stocks to be lower or higher?

After an incredible Friday rally on the heels of a surprisingly good jobs report, the S&P 500 finished the week only about 1% lower on the year -- essentially sideways. The Nasdaq hit all-time highs during intraday trading and is up over 9% year to date.

The Dow Jones Industrial Average is down about 5% in the 2020 calendar year, although you wouldn't know that by looking at the action Friday: The blue-chip index jumped 829 points, or 3.2% to finish at 27,110.

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Very encouraging employment trend. A shockingly positive May jobs report was the catalyst for Friday's rally; nonfarm payrolls actually rose by 2.5 million in the month, blowing analysts' consensus expectations for a decrease of 8.5 million out of the water. In April, nonfarm payrolls were down by nearly 21 million, so May offered quite a contrast.

In a market that's largely been driven by the narrative for the last several months, Friday's numbers offered arguably the first legitimately good macroeconomic numbers since the pandemic began. Leisure and hospitality, construction and even the retail space each saw renewed hiring.

The unemployment rate fell by 1.4 percentage points to 13.3%.

Apple back at record highs. Investors are back aboard the Apple (ticker: AAPL) train, as shares reached a new closing record on Friday. The stock has quickly rallied about 50% off of March lows around $220 per share, and despite lost sales that will inevitably result from store closures and economic turmoil, Wall Street is back in love with the cash-rich company.

2020s most-maligned names jump. While practically every nook and cranny of the market has been too volatile for comfort this year, oil producers and the cruise industry have faced a special hell.

In a move that some doubt will ever be repeated, oil contracts actually went negative just over a month ago, as OPEC and Russia got into a production standoff and a global oil glut caused fears of storage nightmares. As for cruise lines -- well, you know what happened there.

But with oil, up about 4.5% and a surge of optimism reverberating through the markets, U.S. oil and natural gas producer Occidental Petroleum ( OXY) surged 33.7% on Friday, and Royal Caribbean Cruises ( RCL) surged 20.4%.