Surprise drop in unemployment galvanizes Wall Street

news-single-imgcaption" style="width:240px">The indices were prompted by the announcement of a surprise drop in the unemployment rate in May in the United States. (Keystione)

–

The New York Stock Exchange ended Friday on a positive note a week of strong growth, strongly stimulated by the announcement of a surprise drop in the unemployment rate in May in the United States, a sign that the economy is picking up faster than expected .

Its flagship index, the Dow Jones Industrial Average, jumped 3.15% to 27,108.98 points.

The Nasdaq, with a strong technological coloring, appreciated by 2.06% to 9,814.08 points. During the session, it reached a level never reached before.

The S&P 500, the index that represents the 500 largest companies on Wall Street, rose 2.62% to 3,193.93 points.

The indices were led by the announcement of a surprise drop in the unemployment rate in May in the United States, to 13.3%, where observers predicted a rate close to 20%, and by the creation of 2, 5 million jobs over the period, when analysts on average anticipated the destruction of more than 7 million jobs.

The first reopening of shops and restaurants in certain regions of the United States in May clearly allowed the world’s largest economy to recover.

“As more and more states prepare to loosen restrictions in the coming weeks, particularly in the northeastern part of the heavily populated country, employment is expected to continue to rebound in June and beyond” , says Michael Pearce, economist for Capital Economics.

“This faster-than-expected recovery in employment suggests that the virus will not leave the same lasting scars on the job market as usual recessions,” said the expert.

LVMH-Tiffany Wedding

“The American market has been anticipating for weeks what we have some evidence with the report: yes, there has been an economic slowdown, yes there has been a recession, but it is possible that the recovery will happen very quickly “, said Gregori Volokhine, portfolio manager at Meeschaert Financial Services.

Over the week, the Dow Jones appreciated 6.8%, the Nasdaq 3.4% and the S&P 500 4.9%. They have all taken more than 40% since the air hole taken in March.

Investors are banking on the idea that the economy will pick up at a brisk pace as the various American states deconfinate.

Since at the same time the American Central Bank (Fed) and the federal government have injected huge amounts of money into financial circuits to support the economy, they have plenty of liquidity at their disposal to invest.

The bond market also reacted strongly to the employment report: the 10-year rate on the American debt jumped around 8:15 p.m. GMT at 0.8835% against 0.8234% Thursday evening.

The shares of airlines, particularly affected by the health crisis, soared: United Airlines jumped 8.5%, American Airlines 11.2% and Delta 5.5%.

Ditto for cruise lines such as Royal Carribean (+ 20.4%) or Carnival (+ 16.4%).

Bank stocks, which could benefit from a faster than expected rebound in economic activity, were also in good shape: JPMorgan Chase gained 4.5%, Citigroup 5.7%, Bank of America 5%, Wells Fargo 4 , 8%.

Companies whose activity is highly dependent on the strength of growth, such as the construction machinery manufacturer Caterpillar (+ 4.8%) or Boeing (+ 11.4%), also prospered.

The jeweler Tiffany (+ 6.5%), for its part, has taken on colors while investors seem convinced that its acquisition by the luxury giant LVMH is still on the right track after a few days of beating. (awp)

– .