published on November 5, 2021 - 1:14 PM
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(AP) — U.S. stocks pushed further into record heights on Friday following an encouraging report on hiring across the country. The S&P 500 closed 0.4% higher, clinching an all-time high for the seventh straight day.

Trading was scattershot, though, and after climbing to an early gain of 0.8%, the S&P 500 at one point gave up virtually all of it. Stocks retrenched in the middle of the day as Treasury yields surprisingly slumped. The 10-year yield, which tends to move with expectations for the economy and inflation, dropped to 1.48%, near its lowest level since September. Crude oil prices rose.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
NEW YORK (AP) — U.S. stocks are pushing further into record heights on Friday following an encouraging report on hiring across the country.

The S&P 500 was 0.3% higher in afternoon trading and on track to clinch an all-time high for the seventh straight day. Trading was scattershot, though, and after climbing to an early gain of 0.8%, the S&P 500 at one point gave up virtually all of it.

Stocks retrenched in the middle of the day as Treasury yields surprisingly slumped. The 10-year yield, which tends to move with expectations for the economy and inflation, dropped near its lowest level since September.

Analysts had varying explanations for the sharp moves in the bond market, which some called counterintuitive.

After an early-afternoon revival, the Dow Jones Industrial Average was back up by 210 points, or 0.6%, at 36,334. The Nasdaq composite was 0.1% higher, as of 3:08 p.m. Eastern, and the Russell 2000 index of smaller stocks was jumping by 1.2%.

An encouraging report from Pfizer helped to buoy the market, particularly companies that most need daily life to return to normal from the pandemic.

Pfizer rose 9.3% after it said its experimental pill sharply cut rates of hospitalization and death for COVID-19 patients. Airlines, casinos, cruise lines and live-event companies had similar jumps.

But the headline report of the day was the one from the Labor Department that showed employers hired a net 531,000 workers in October. That was more than 100,000 above economists’ expectations.

One potential worry spot for markets was a big jump in workers’ wages, up 4.9% from a year earlier, which can feed into concerns about inflation. But the numbers were relatively in line with economists’ expectations.

“It was one of those Goldilocks reports,” said Nate Thooft, head of global asset allocation at Manulife Investment Management. Besides showing stronger-than-expected hiring, “the simple reality was it wasn’t showing any overheating either.”

That’s why it was surprising that the 10-year Treasury yield fell to 1.44% from 1.52% late Thursday.

One possible reason was that investors see more people heading back to work as helping to clear the supply-chain bottlenecks that have hit the economy and driven up inflation, said Brian Jacobsen, senior investment strategist at Allspring Global Investments. That could lead to lowered expectations for inflation, which would add downward pressure on Treasury yields.

“The more people we get back to fill open positions will help keep that shortage pressure at bay a little bit,” said Matt Stucky, senior portfolio manager at Northwestern Mutual Wealth Management Co.

But the degree of moves in the bond market still took market watchers by surprise.

“Some of these moves look extreme to me,” Allspring Global Investment’s Jacobsen acknowledged, citing a sharp drop for the 30-year Treasury yield to 1.88% from 1.96%. “I don’t think we can justify where yields are. It leads me to believe that this is some rather rapid repositioning by traders in the market and not necessarily a change in the trend.”

For stocks, the trend has been solidly upward recently as a parade of companies has reported stronger profit for the summer than analysts expected. More than four out of five companies in the S&P 500 have topped forecasts, with roughly 90% of reports in hand, according to FactSet.

Companies in the index appear on track to report 39% growth in their quarterly earnings per share over year-ago levels, which would be the third-fastest since 2010.

Online travel company Expedia jumped 14.9% and home-sharing company Airbnb rose 12% after releasing surprisingly good earnings reports.

On the losing end was exercise equipment maker Peloton. It plunged 35% after cutting its sales forecast.

Health care stocks were also lagging the market. Moderna slumped 18.3% as it continues to fall follwoing a Thursday cut to its forecast for vaccine deliveries in 2021.


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