U.S. markets and stock exchange traded funds advanced Friday toward record highs after the disappointing jobs report helped raise bets on a coronavirus stimulus package to support a flagging economic recovery.
On Friday, the Invesco QQQ Trust (NASDAQ: QQQ) rose 0.4%, the SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was up 0.7%, and the iShares Core S&P 500 ETF (NYSEArca: IVV) gained 0.7%.
The Labor Department’s closely watched jobs report revealed nonfarm payrolls only added 245,000 jobs in November, the smallest increase since the jobs recovery started in May and well short of 610,000 added in October, Reuters reports.
The lackluster report, though, fueled bets that policymakers could push harder for a relief stimulus bill as over 13 million Americans are due to lose their government-funded unemployment benefits on December 26 if Congress takes no action.
“The bad news of the weakening jobs picture is potentially good news for investors because it means that the stimulus bill is much more likely to take place in a fairly short time frame,” Ryan Detrick, senior market strategist at LPL Financial, told Reuters.
After a months-long stalemate between Republicans and Democrats over the size of the potential stimulus package, policymakers are now looking at a trimmed down $908 billion Covid-19 aid plan.
“You are still looking at an economy that is in pain,” Amy Kong, chief investment officer at Barrett Asset Management, told the Wall Street Journal. “You want to make sure that the household income is continuing on, or the momentum is there, because I believe once household income gets to a level where it impacts confidence, it’s going to be hard to get folks to spend again.”
Additionally, the two sides are coming up on a Dec. 11 deadline to pass a $1.4 trillion budget or risk a shutdown of the government.
Meanwhile, positive vaccine updates from major drugmakers have assuaged market fears over the recent economic data and a resurgence in infections, pushing major benchmarks toward another week of gains and to new record highs after the S&P 500 enjoyed its best November to date.
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