Stocks rise on hope that awful jobs report marks the bottom

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People wearing a face mask to help curb the spread of the coronavirus stand near an electronic stock board showing Japan’s Nikkei 225 index at a securities firm in Tokyo Friday, May 8, 2020. Asian shares surged Friday on optimism the worst of the economic fallout from the pandemic may be over, as Wall Street logged its biggest rally in a week.(AP Photo/Eugene Hoshiko)

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Wall Street rallied again on Friday after a terrible, unprecedented report on the U.S. jobs market wasn’t quite as horrific as economists had forecast.

The S&P 500 climbed 1.1% in early trading after the government said employers cut a record-setting 20.5 million jobs last month. While the number is a nightmare, it was slightly below the 21 million that economists told markets to brace for. Investors are also increasingly betting they won’t see another report that bad again because the number of workers filing for unemployment benefits has been slowly declining the last five weeks.

Stocks around the world were already heading higher before the U.S. jobs report came out, in part on hopes that U.S. and China won’t restart their trade war. After the release of the report, stocks climbed even more. In another sign of receding pessimism in the market, Treasury yields also rose.

The Dow Jones Industrial Average was up 313 points, or 1.3%, at 24,188, as of 9:58 a.m. Eastern time. The Nasdaq was up 0.8%. The S&P 500 is heading toward its first winning week in the last three.

After losing a third of its value in a little more than a month on worries about a severe recession, the S&P 500 has since charged higher to recover more than half its loss. The rally started after the Federal Reserve and Capitol Hill pledged trillions of dollars in aid to prop up the market and economy through the downturn.

More recently, even as horrific data confirmed the recession fears were correct, investors have pushed stocks higher as they looked ahead to growth potentially resuming later this year as economies begin to relax restrictions on business.

“This is a policy-induced downturn, and the speed and structure of the recovery could track a different path from previous recessions,” Stephen Innes, chief global markets strategist at AxiCorp, said in a report. “The bounce-back will be much quicker.”

Many analysts are skeptical of the rally, though, saying the economy likely won’t recover nearly as vigorously and quickly as the stock market has.

Friday’s jobs report showed that the unemployment rate climbed to its highest level since the Great Depression.

Stocks got off to a strong start earlier on Friday after a Chinese state media report said top U.S. and Chinese trade negotiators talked on the phone and are working to implement a trade deal. That helped calm building concerns that tensions between the world’s largest economies were close to flaring up again. The last thing investors wanted as the global economy slides into a severe recession was another round of punishing tit-for-tat tariffs that would drag even more.

In Asia, Hong Kong’s Hang Seng added 1%, and stocks in Shanghai rose 0.8%. South Korea’s Kospi gained 0.9%. IN Europe, France’s CAC 40 rose 0.7%, and Germany’s DAX returned 1%.

The yield on the 10-year Treasury note rose to 0.65% from 0.63% late Thursday. That yield tends to move with investors’ expectations for the economy and inflation.

Benchmark U.S. crude rose 2.8% to $24.20 per barrel, continuing its strong week and recovering some more of its record-setting losses from earlier in the year. Brent crude, the international standard, added 1.7% to $29.95 per barrel.

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AP Business Writer Yuri Kageyama contributed.

Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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