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January 8, 2021

Stocks hit new records despite dour jobs report

By Paul R. La Monica, CNN Business

Bad news is good news again on Wall Street. Stocks rose at the opening bell Friday to hit more new records -- despite the fact that the United States government reported a surprise loss of 140,000 jobs in December.

Why? The weak numbers highlight the need for more stimulus from Washington.

The Dow, S&P 500 and Nasdaq were all up in early trading as investors seem to be betting more help will soon be coming. Joe Biden will be inaugurated in less than two weeks and Democrats now control the Senate as well as the House following this week's Georgia run-off elections.

"The ongoing battle against the pandemic is putting pressure on the real economy once again," said Charlie Ripley, senior investment strategist for Allianz Investment Management, in an email to CNN Business, "and despite what financial markets are signaling, the labor market is indicating there is still a ways to go on the economic road to recovery."

"The ability for Congress to provide additional fiscal support has increased and today's employment report simply beckons them to do so," Ripley added.

Hopes are also growing for a recovery in the economy as well as corporate earnings later this year, as more people are likely to get one of the Covid-19 vaccines from Pfizer and BioNTech or Moderna.

"Investors are already looking through this temporary period of economic weakness and instead focusing on the brighter outlook where fiscal spending, monetary stimulus and mass distribution of the COVID-19 vaccines together ensure the US economy quickly returns to its pre-pandemic path," said Seema Shah, chief strategist at Principal Global Investors, in a report Friday.

The economic recovery hopes are a likely reason why bond yields are bouncing back too. The yield on the US 10-year Treasury recently rose above 1% for the first time since March and inched higher after the jobs report as well.

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