Wall Street up at the close despite gloomy employment report

  •   11/05/2020 - 11h05
  •   DEHOUI Lionel

This Friday, the values posted by Wall Street are up at the close even though the employment report remains gloomy. The latter remains devastating for the entire month of April and should worry the New York Stock Exchange. But the rise is due to the fact that investors are convinced that the peak of the pandemic has already passed. The Dow Jones, America's leading index, rose by 1.91% to 24,331.32 points. As for the Nasdaq, it takes 1.58% to 9,121.32 points with a strong technological colouring. Similarly, the S&P 500 Expanded Index gained 1.69% to 2,929.80 points, showing the state of Wall Street's 500 largest companies. The score remains positive for the week as a whole, starting with the Dow Jones climbing 2.6%. The S&P 500 does better with a 3.5% increase while the Nasdaq rises to 6%.

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Wall Street up at the close despite gloomy employment report

Job losses

While it is true that there has been a rebound in all three Wall Street indices since March 23, the situation is not the same for employment. The situation remains gloomy when we look at the figures put forward in the employment report. These break an all-time record in record time. The current pandemic has resulted in the destruction of 20.5 million jobs in the United States during the whole of April. Analysts at Oxford Economics made an interesting observation.

They thus notice that this loss of jobs is double that recorded during the economic crisis of 2007-2009. They also note that there has been more job destruction over the past two months. Over the last ten years, they note that the number of jobs created remains lower than the number of jobs lost (March and April 2020). From February to April, the unemployment rate moved from 3.5% to 14.7%. Never recorded since June 1940.

 

Factors responsible for the increase

According to Art Hogan of National Holdings, investors continue to look ahead to the upcoming results of companies or businesses. But they expect data to change positively as early as Q3 before finally improving in Q4. The results of some companies are already encouraging them. For example, the Uber group, which grew by +6.01%. The latter claims that during the last three weeks, its activity has strongly progressed. It is supported by other companies.

The Ford group finds itself at +7.60% and programs its resumption of production for May 18 on American soil. Investors are also comforted in their estimate by the gradual resumption of U.S. economic activity in some areas. Hogan goes on to say that U.S. financial market participants do not expect a new wave of contagion. In that case, there will still be very strict restrictions that will be put in place as at present.

Information: It is therefore clear that investors and shareholders remain optimistic about the post-health crisis. They are still boosted in their forecast by the current high level of cash flow. Indeed, in order to ensure the smooth functioning of the American markets, the American Central Bank has injected large sums of money into them (over the last 2 months). According to the specialist, it is all these factors that have favoured the rise observed on the indices side.