Market Snapshot: Dow climbs to record as hope for fiscal relief overshadows weak jobs data

U.S. stock indexes traded at new records Friday after a report on employment showed fewer jobs were created in November than had been estimated by economists, perhaps bolstering the case for further fiscal stimulus from Congress.

What are major benchmarks doing?

The Dow Jones Industrial Average

rose 173 points or 0.6%, to 30,142, carving out an intraday record at 30,157.18, while the S&P 500

gained 21 points, or 0.6%, to about 3,688. The Nasdaq Composite Index

rose 49points, or 0.4%, to 12,426.

All three major benchmarks were trading on track to close at all-time highs.

Stocks ended mixed in a choppy session Thursday, with the Nasdaq Composite eking out a record close.

What’s driving the market?

The U.S. Labor Department report showed that 245,000 jobs were created in November, marking the smallest gain since the economy began to emerge from lockdown in the spring, as the unemployment rate fell to 6.7% from 6.9%.

Investors are looking at the strength of the labor market as the COVID-19 pandemic worsens for clues at to whether lawmakers in Washington might finally pass another round of financial aid to bolster the economic recovery.

Read: Job growth has seriously slowed’ — economists react to ‘disappointing’ November employment report

“We’ve gotten a big step closer to consensus on stimulus,” said Paul Kim, CEO of Simplify Asset Management “Everything looks good on the surface but you scratch a little below the surface, you see job growth stagnating, small and medium businesses starting to hurt, you see a binary market. It’s the old saying, the markets are not the economy. Markets are looking way ahead and the fundamental segments of the economy are saying, hey wait a minute.”

In other economic reports though, U.S. factory goods orders rose for the sixth straight month in October, the Commerce Department said Friday. Orders for manufactured goods rose 1% after a 1.3% gain in the prior month.

Kim thinks the recent jump in Treasury yields shows the “most conservative” corner of financial markets starting to take the recovery story seriously. Yields had lagged other assets, he noted.

However, Minneapolis Federal Reserve Bank President played down prospects for a rapid pickup in inflation as the economy recovers. Kashkari said he didn’t think “high” inflation was “around the corner,” during a moderated discussion sponsored by a southeast Minnesota business association.

Other analysts agreed that the weaker-than-expected jobs data could be a positive for equities because it would inject more urgency into talks between lawmakers over another round of pandemic aid.

“Noticeably though, the market’s response to today’s weak jobs number is muted. It seems like investors are focusing on the prospect of additional fiscal stimulus and today’s weak number potentially pushes the negotiations over the finish line,” wrote Seema Shah, chief strategist, Principal Global Investors, in emailed comments.

House Speaker Nancy Pelosi said Friday that talks on a COVID-19 relief package have “momentum,” and that the weaker-than-expected November jobs report gives more reason for Congress to act.

Senate Majority Leader Mitch McConnell, R-Ky., said Thursday that reaching a compromise on another coronavirus fiscal stimulus package was possible, as long as Democrats moved toward Republican positions.

The remarks came after congressional Democratic leaders said Wednesday they were endorsing a bipartisan proposal estimated to cost about $908 billion, well above what McConnell has supported but well below the more than $2 trillion effort Democrats had pushed in talks ahead of the election.

“Since capital markets have been trading on nothing more than government intervention on both [the] monetary and fiscal side ever since the March panic lows, any prospect of additional immediate stimulus would be viewed as bullish by the market and indexes would likely sprint to fresh record highs into the close of the week ,” said Boris Schlossberg, managing director of BK Asset Management, in a note.

Stocks saw historic gains in November and continued to push higher this week in a rally tied largely to optimism over progress toward COVID-19 vaccines, with investors looking past a sharp rise in new cases and deaths over the same period.

Read: Why a rising stock market and a falling dollar are likely to keep going hand in hand

Which companies are in focus?
How are other assets performing?

The pan-European Stoxx 600 index

 closed 0.6% higher to end the week, while the U.K.’s FTSE 100 index

advanced 0.9%.

In Asian markets, China’s Shanghai Composite Index

finished less than 0.1% lower, the CSI 300 finished 0.2% higher, while Hong Kong’s Hang Seng

booked a 0.4% gain. Japan’s Nikkei 225

 ended 0.2% lower on Friday.

The yield on the 10-year Treasury note

rose 6 basis points to around 0.969% amid hopes for a fiscal package. Yields and prices move in opposite directions.

The ICE U.S. Dollar Index
a gauge of the greenback’s strength against its major rivals, was 0.1% lower, around a two-year low.

Crude-oil futures

s gained 24 cents, or 0.3%, to trade at $45.87 a barrel on the New York Mercantile Exchange after OPEC+ agreed to curb production. Gold futures

 ticked down $1.10, 0.1%, to settle at $1,840 an ounce as traders embraced riskier assets.