WALL STREET HIT RECORD HIGH
Wall Street's main indexes hit record highs in a broad-based rally on Friday, after US labor market data and news on a new Pfizer pill improved investors' optimism about global economic recovery boosting stocks related to an economic rebound. The US economy added 531K jobs in October, more than expected, the jobless rate fell to a new pandemic low of 4.6%, while wage pressures remained under control.
The Dow was up 1.4% to 36,328, the S&P 500 booked 2% gains to close at 4,698, and the Nasdaq rose 3.2% to trade at 15,972. Ten of the 11 major S&P sectors advanced, with three of them gaining more than 1% each. The small cap Russell 2000 index (.RUT) added 1.6%, also scaling a record peak. The Labor Department's report showed U.S. employment increased more than expected last month as COVID-19 infections over the summer subsided, although worker shortages continued to boost wage growth, with annual hourly earnings increasing to 4.9% in October.
Although (the data) bodes well for the recovery in the U.S., the rise in earnings year on year of 4.9% does highlight worries about wage inflation. But the numbers aren't likely to be hot enough to blow the Federal Reserve off its course of gradually tapering its stimulus programme. Pfizer Inc (PFE.N) surged 7.9% after the drugmaker's experimental antiviral pill for COVID-19 cut by 89% the risk of developing severe disease. Shares of Merck (MRK.N) slipped 9.6%, dragging the S&P healthcare sector (.SPXHC) lower. Travel stocks rose following Pfizer's announcement, with the S&P 1500 Airlines index (.SPCOMAIR) climbing 6.5% and cruise operators Carnival Corp (CCL.N), Royal Caribbean Cruises (RCL.N) and Norwegian Cruise (NCLH.N)rising about 9% each.
Still early to be definitive but this (pill) looks like a true game changer for many industries like leisure and transportation, you're seeing it reflected in the prices. Earnings for the most part are fairly strong, promising. It's not a perfect world out there but by and large the numbers are good. Among earnings-driven moves, Expedia (EXPE.O) jumped 14.5% after the online travel agency posted upbeat third-quarter revenue, while Pinterest Inc (PINS.N) climbed 7.1% on a strong fourth-quarter revenue forecast.
A stellar third-quarter reporting season, coupled with a cheery outlook on earnings growth as well as a central bank in no rush to hike interest rates, has boosted investor appetite for equities recently. Meanwhile, President Joe Biden on Friday urged U.S. lawmakers worried about rising inflation to pass the infrastructure and domestic spending bills currently before the House of Representatives. Shares of so-called 'stay-at-home' names like Zoom Video Communications (ZM.O) and Netflix Inc (NFLX.O) dropped 6.6% and 1.9%, respectively. Peloton Interactive Inc (PTON.O) sank 34.0% after it slashed its full-year sales outlook by up to $1 billion. Advancing issues outnumbered decliners by a 2.48-to-1 ratio on the NYSE and by a 1.44-to-1 ratio on the Nasdaq. The S&P index recorded 82 new 52-week highs and two new lows, while the Nasdaq recorded 282 new highs and 58 new lows.
Meanwhile, the yield on the benchmark 10-year Treasury note dropped below 1.5% on Friday, hovering around its lowest level in a month, after rising to as high as 1.55% earlier in the session, as investors digested the US employment report. While the unemployment rate fell to a new pandemic low of 4.6% and wage growth remained solid, earlier this week, the US Federal Reserve announced an expected reduction in stimulus but signaled no hurry to hike interest rates while reiterating inflationary pressures are likely to be transitory.
