U.S. stocks moved broadly higher for a fourth consecutive day Friday as investors look to start June with a strong weekly gain after a downturn in May.
Investors bought stocks and bonds after a report showing weaker than expected hiring in the U.S. in May appeared to increase the odds the Federal Reserve will have to cut interest rates in the coming months. Federal Reserve Chairman Jay Powell had signaled the possibility earlier in the week.
The lackluster jobs report could be a sign that businesses are becoming more cautious as economic growth slows and the U.S. engages in multiple trade conflicts.
The S&P 500 index rose 1.2% as of 12:45 p.m. Eastern time, and is on track for its best week since late November. The Dow Jones Industrial Average rose 293 points, or 1.1%, to 26,013. The Nasdaq composite rose 1.8%. The Russell 2000 index of smaller companies rose 0.8%.
Bond prices rose, pushing yields lower, also a sign that the market is worried about slower economic growth. The yield on the 10-year Treasury fell to 2.07% from 2.12% on Thursday. Banks, which rely on higher yields for profit from loan interest, fell broadly and pulled the financial sector lower.
But most sectors soared higher. Technology stocks led the gainers on Friday. Microsoft rose 3% and Apple rose 2.8%. Health care companies and internet stocks were also among the largest gainers. Johnson & Johnson rose 1.5% and Facebook rose 2.4%.
Analysts are more confident that the Fed is closer to cutting rates as it gauges the latest weak employment data and downward revisions for previously reported data. The Labor Department said U.S. employers added just 75,000 jobs last month, and also said hiring in March and April was not quite as robust as originally reported.
“The stock markets are banking on the Fed’s ability to step in and save the day, as it has for much of the last decade,” said Cliff Hodge, director of investments for Cornerstone Wealth.
The next rate cut could come as early as July, he said, as the slide in bond yields signals that investors are preparing for slower economic growth.
Investors are also optimistic about prospects for a U.S.-Mexico trade deal. The U.S. is poised to start imposing 5% tariffs on Mexican goods Monday but both sides are negotiating and media reports have suggested that the U.S. could consider delaying the tariffs.
This week’s rally has offset some of the losses from May, when President Donald Trump escalated trade wars with China and Mexico by threatening or imposing new tariffs. That disrupted a strong run by the market to start the year that culminated in the S&P hitting a new high on April 30.
Technology stocks suffered a sharp blow from the ramped up disputes, particularly with China. Even with this week’s gains, as of Thursday the technology heavy Nasdaq was down 6.7% since hitting a record on May 3 and technology stocks within the broad S&P 500 index had fallen 5.4%.
Facebook and Google parent Alphabet dragged down the internet-heavy communications sector over the past month. The sector is suffering the most and is down almost 9% from its April 29 high. Consumer-focused stocks are down about 6%, with a large portion of companies depending on China for significant revenue.
Meanwhile, investors have signaled their expectation that the Fed would have to cut rates because of a cooling economy by buying bonds. The yield on the 10-year Treasury is now 2.07%, down from a close of 2.48% on April 7. Yields move inversely to bond prices.
Gold, which is also viewed as a safe-play investment, gained 5% over the last month.
CLOSING THE BOOK: Barnes & Noble rose 11.8% after the last of the big book retailers announced its sale to a hedge fund for $476 million.
Hedge fund Elliott Management is expected to close the buyout in the third quarter. The chain was the main force behind the demise of independent bookstores and was ultimately laid low by the shift to online sales and Amazon’s rise.
BEYOND EXPECTATIONS: Beyond Meat soared 34% after the plant-based meat maker beat Wall Street’s first quarter financial forecasts.
The company also gave investors a solid revenue forecast for the year.
Sales of the company’s fresh products — burgers and sausages — jumped 304% during the quarter.
At around $135, Beyond Meat’s stock price is now more than five times higher than the $25 offering price from its May 2 initial public offering.