Stocks rebound after strong jobs report

Stocks surged on Friday after the Labor Department’s February employment report handily exceeded expectations, reaffirming the building momentum in the economic recovery. The moves helped reverse some of Thursday’s losses, with the major indexes slumping as Treasury yields resurged and concerns over rising inflation fomenting volatility in equity markets. 

The Dow added more than 250 points, or 0.9%. while those on the Nasdaq recovered to rise 0.9%. On Thursday, the Nasdaq dropped 2.1% for its third consecutive session of steep declines, erasing the index’s year-to-date gains and bringing it within 0.5% of a formal correction, or down at least 10% from a recent record closing high as of a market close.

Treasury yields rose to nearly 1.6%, hovering around a one-year high after the Labor Department’s February jobs report showed the economy made additional strides to bring back payrolls early this year, with jobs rising by a better-than-expected 379,000 during the month. 

“An above average payroll report (+379k), upward revisions, and a falling unemployment rate (to 6.2%) point to continued recovery. Markets will remain concerned that the potentially massive impact of a $1.9 trillion fiscal relief package could turbo charge the recovery later in the year, and spill into higher inflation,” David Donabedian, chief investment officer of CIBC Private Wealth, wrote in an email Friday morning. “A 355,000 gain in the leisure and hospitality sector suggests that the economy is re-opening from COVID lockdowns, with more expected in the months ahead.” 

Federal Reserve Chairman Jerome Powell suggested Thursday that the central bank would remain “patient” with holding benchmark rates near zero, even in the face of rising inflationary pressures. Some investors have worried that the massive stimulus passed by Congress – with another $1.9 trillion stimulus package currently up for debate in the Senate – alongside ultra-accommodative monetary policy may be stoking an even faster-than-expected economic recovery, which could lead to a runaway surge in prices. Technology stocks have especially borne the brunt of this week’s leg lower in equity markets, as investors unwound their positions in high-growth stocks in favor of shares of companies with earnings more closely tied to a strong economic recovery.

Story continues

“I think what has spooked investors is two things: One is the speed with which we got from essentially just below 1% to 1.5% [in the 10-year Treasury yield] in the first two months of the year. Forecasts were certainly for getting to this level, and up to as high as 2%, by the end of the year, but it happened rather quickly,” Tony Rodriguez, Nuveen head of fixed income strategy, told Yahoo Finance.

“And then I think also, it’s the positive information that we’ve gotten in terms of fiscal policy, in terms of actual economic data and in terms of the successful, or really sped-up rollout of the vaccine leading to much much more positive projections for growth,” he added. “And that’s spooked investors, in terms of whether the Fed is going to have to respond by potentially tightening soon.”

—

9:30 a.m. ET: Stocks open higher after strong jobs report 

Here’s where markets were trading shortly after the opening bell:

• S&P 500 (^GSPC): +34.24 points (+0.91%) to 3,802.71

• Dow (^DJI): +272.11 points (+0.88%) to 31,196.25

• Nasdaq (^IXIC): +108.50 (+0.85%) to 12,831.6

• Crude (CL=F): +$1.86 (+2.91%) to $65.69 a barrel

• Gold (GC=F): +#3.50 (+0.21%) to $1,704.20 per ounce

• 10-year Treasury (^TNX): +4.2 bps to yield 1.592%

—

8:44 a.m. ET: February jobs report smashes expectations

The U.S. economy added back the most jobs in four months in February, as easing COVID-19 case counts and a ramping vaccine rollout allowed distancing restrictions to begin to moderate. The unemployment rate also unexpectedly improved during the month.

Non-farm payrolls rose by 379,000 in February, or well above the 200,000 expected. The unemployment rate dipped to 6.2%, unexpectedly improving compared to January’s 6.3%. And the improvement in the jobless rate came even as the labor force participation rate steadied at 61.4%.

The February jobs report also included a notable upward revision to payrolls gains in January, but a downward revision to losses in December. January’s payroll gain was revised up to 166,000 from the tepid 49,000 previously reported. However, December’s payroll losses – the first since April — were revised to 306,000, from the 227,000 reported earlier. Altogether, the U.S. economy remains about 9.5 million payrolls short of its pre-pandemic levels.

—

7:25 a.m. ET Friday: Stock futures point to a mixed open

Here’s where markets were trading ahead of the opening bell Friday morning:

• S&P 500 futures (ES=F): 3,767.25, up 1.75 points or 0.05%

• Dow futures (YM=F): 30,896.00, up 18 points or 0.06%

• Nasdaq futures (NQ=F): 12,435.25, down 19.75 points or 0.16%

• Crude (CL=F): $65.40 per barrel, +$1.57 (+2.46%)

• Gold (GC=F): $1,692.60 per ounce, -$8.10 (-0.48%)

• 10-year Treasury (^TNX): +0.9 bps to yield 1.559%

—

6:01 p.m. ET Thursday: Stock futures trade mixed

Here’s where markets were trading as the overnight session kicked off:

• S&P 500 futures (ES=F): 3,765.00, down 0.5 points or 0.01%

• Dow futures (YM=F): 30,890.00, up 12 points or 0.04%

• Nasdaq futures (NQ=F): 12,435.75, down 19.25 points or 0.15%

—

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

Read more from Emily: