US stocks rose on Friday, ending a strong week on Wall Street as investors hoped a disappointing January job report would increase the likelihood of further stimulus.
The Dow Jones Industrial Average rose 92.38 points, or 0.3%, to 31,148.24, led by Nike and Cisco. The S&P 500 climbed 0.4% to a record close of 3,886.83 as 10 of the 11 sectors posted gains. The Nasdaq Composite gained 0.6% to 13,856.30 and also reached a new closing high.
All three major benchmarks had their best week since November. The blue-chip Dow rose 3.9% for the week, while the S&P 500 and tech-heavy Nasdaq gained 4.7% and 6%, respectively. The small-cap Russell 2000 gained 7.7%, its best weekly performance since June.
The Department of Labor said the US created 49,000 jobs in January, slightly less than the 50,000 payroll slips expected by economists. The unemployment rate fell to 6.3% and was thus above the forecast of 6.7%. The December numbers have been revised significantly lower, with the month posting a loss of 227,000 from the initial figure of 140,000 jobs lost.
“The number of jobs was particularly staggering as far fewer jobs were expected,” said Chris Zaccarelli, chief investment officer for the Independent Advisor Alliance. “Ultimately, the stock market expects the economy to continue to recover and has moved up on federal incentives, which arguably are the bigger story.”
The Senate passed a budget resolution early Friday as the Democrats press ahead with the process of passing a $ 1.9 trillion coronavirus relief bill with no Republican votes. The package includes stimulus checks worth $ 1,400, additional unemployment benefits, and Covid-19 vaccination and testing funds.
President Joe Biden warned Friday that Republican efforts to pass minor law would only extend the economy’s path to recovery.
The Cboe Volatility Index, known as VIX, is down more than 12 points this week on Friday 21st, with a speculative trading frenzy dissipating. Some on Wall Street believe that if the fear indicator drops below 20 it could send a big “risk on” signal as the level would trigger buying by algorithmic traders and other big players.
Wall Street was also in the middle of a solid earnings season. Of the 184 companies in the S&P 500 that have reported profits to date, 84.2% exceeded analysts’ expectations, according to Refinitiv.
“The three pillars of the rally have actually gotten stronger: fourth quarter results continue to exceed expectations dramatically, more stimulus is being given to the economy and the pace of vaccination is accelerating,” said Adam Crisafulli, founder of Vital Knowledge, in a note.
Subscribe to CNBC PRO for exclusive insights and analysis as well as live business day programs from around the world.
– CNBC’s Maggie Fitzgerald contributed to the coverage.
Correction: In an earlier version, the first reading of the December job report was incorrectly stated. It was also misrepresented which stock indices are on track to release their fifth consecutive positive day. The indices are the S&P 500 and the Dow.