By Christine Idzelis and William Watts
All three major U.S. stock indexes ended at all-time highs Friday, with the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite each notching a fifth straight week of gains after a stronger-than-expected October jobs report.
Pfizer Inc. shares surged as the vaccine maker released a study of its COVID-19 antiviral drug suggesting it is successful in combating the illness. The news was seen adding to positive investor sentiment for equities and the economic recovery.
How did stock indexes trade?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -3.55% rose 203.72 points, or 0.6%, to close at a new peak of 36,327.95.
The S&P 500 /zigman2/quotes/210599714/realtime SPX -4.04% gained 17.47 points, or 0.4%, to finish at a record 4,697.53.
The Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -4.75% added 31.28 points, or 0.2%, to an all-time high of 15,971.59.
On Thursday , the Dow Jones Industrial Average snapped a five-day winning streak, while the S&P 500 and Nasdaq Composite each logged a sixth straight record close.
For the week, the Dow rose 1.4%, the S&P 500 gained 2% and the Nasdaq advanced 3%. The Dow had its longest winning streak since the week ending February 22, 2019, according to Dow Jones Market Data.
What drove the market?
U.S. stocks climbed to fresh records on a good jobs report and investor optimism surrounding the study of Pfizer’s antiviral drug treating COVID-19.
“You see a huge rotation into the reopening trade,” said Zhiwei Ren, managing director and portfolio manager at Penn Mutual Asset Management, in a phone interview Friday. Shares of airlines, hotels and restaurants have jumped on the Pfizer news as it appears people may be able to “to take a pill when they get sick” from COVID to prevent severe illness.
Shares of online travel company Expedia Group Inc. /zigman2/quotes/202291990/composite EXPE -2.12% soared Friday, closing 15.6% higher, according to FactSet data. Concert promoter Live Nation Entertainment Inc. /zigman2/quotes/203077299/composite LYV -1.73% jumped 15.1% while Royal Caribbean Group /zigman2/quotes/208854639/composite RCL -7.46% sailed about 9% higher.
The U.S. economy created 531,000 jobs in October , the Labor Department said Friday. Economists surveyed by The Wall Street Journal had forecast a rise of 450,000. The unemployment rate fell to 4.6% last month from 4.8%. Also, September job gains were raised to 312,000 from a previous estimate of 194,000, while August jobs were raised to 483,000 from 366,000.
“The Fed appears comfortable with the economy right now and today’s jobs report validated that optimism,” said David Donabedian, chief investment officer of CIBC Private Wealth U.S.
“Third quarter earnings, the [Fed] plans to taper quantitative easing without rushing to raise rates, and the falling unemployment rate in October have created tailwinds for the equity market. It is not surprising to see another strong week for stocks,” he said.
However wages were up nearly 5% year over year, which can be a harbinger of stickier inflation. “If we continue to see strength in wage numbers going forward, it may catalyze the Fed to get more aggressive on taper and could pull forward rate hike expectations next year,” said Cliff Hodge, chief investment officer for Cornerstone Wealth.
Investors also snapped up Treasurys in the wake of the data, sending yields, which move the opposite direction of prices, down sharply . The benchmark 10-year Treasury yield /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y -2.44% dropped about 7 basis points to 1.451%, hitting its lowest level since late September.