Stocks Jump, on Track for Best Week Since Late November
NEW YORK (AP) — U.S. stocks moved broadly higher for a fourth consecutive day as investors look to start June with a strong weekly gain after a downturn in May.
Investors bought stocks and bonds after a report showing weaker than expected hiring in the U.S. in May appeared to increase the odds the Federal Reserve will have to cut interest rates in the coming months. Federal Reserve Chairman Jay Powell had signaled the possibility earlier in the week.
The lackluster jobs report could be a sign that businesses are becoming more cautious as economic growth slows and the U.S. engages in multiple trade conflicts.
Bond prices rose, pushing yields lower, also a sign that the market is worried about economic growth. The yield on the 10-year Treasury fell to 2.07% from 2.12% on Thursday. Banks, which rely on higher yields for profit from loan interest, fell broadly and held back gains for the financial sector.
But most sectors soared higher. Technology stocks led gains on Friday. Microsoft rose 1.6% and Apple rose 1%. Health care companies and internet stocks were also among the largest gainers. Johnson & Johnson rose 1.3% and Facebook rose 1.6%.
Investors are also optimistic about prospects for a U.S.-Mexico trade deal. The U.S. is poised to start imposing 5% tariffs on Mexican goods Monday but both sides are negotiating and media reports have suggested that the U.S. could consider delaying the tariffs.
The S&P 500 index rose 1.3% as of 10:55 a.m. Eastern time, and is on track for its best week since late November. The Dow Jones Industrial Average rose 329 points, or 1.3%, to 26,049. The Nasdaq composite rose 1.8%.
This week’s gains have offset some of the losses from May, when President Donald Trump escalated trade wars with China and Mexico by threatening or imposing new tariffs. That disrupted a strong run by the market to start the year that culminated in the S&P hitting a new high on April 30.
Technology stocks suffered a sharp blow from the ramped up disputes, particularly with China. Even with this week’s gains, the technology heavy Nasdaq is down 6.7% since hitting a record on May 3 and technology stocks within the broad S&P 500 index have fallen 5.4%.
Meanwhile, Facebook and Google parent Alphabet dragged down the internet heavy communications sector over the month. The sector is suffering the most and is down almost 9% from its April 29 high. Consumer-related stocks are down about 6%, with a large portion of companies depending on China for significant revenue.
Meanwhile, investors have signaled their expectation that the Fed would have to cut rates because of a cooling economy by buying bonds. The yield on the 10-year Treasury is now 2.07%, down from a close of 2.48% on April 7. Yields move inversely to bond prices.
Gold, which is also viewed as a safe-play investment, gained 5% over the last month.
CLOSING THE BOOK: Barnes & Noble rose 11.2% after the last of the big book retailers announced its sale to a hedge fund for $476 million.
Hedge fund Elliott Management is expected to close the buyout in the third quarter. The chain was the main force behind the demise of independent bookstores and was ultimately laid low by the shift to online sales and Amazon’s rise.
BEYOND EXPECTATIONS: Beyond Meat soared 29% after the plant-based meat maker beat Wall Street’s first quarter financial forecasts.
The company also gave investors a solid revenue forecast for the year.
Sales of the company’s fresh products — burgers and sausages — jumped 304% during the quarter.
By AP reporter Damian J. Troise