The Dow Surges as Unemployment Rate Drops to 13.3%
Today was a shocking good day, to say the least, as May's unemployment rate was much lower than expected, sending U.S. stocks to rally.
According to data reported by the Labor Department on Friday, the jobless rate fell to 13.3% in May, down from 14.7% in April. The results crushed economists' projections surveyed by Dow Jones, who were expecting unemployment to exceed 19%. If the results were in line with projections, the figures would have been the worst since the Great Depression.
The report comes as the Labor Department said an additional 1.87 million more Americans filed for jobless benefits for the week ending May 30, down from the 2.12 million figure in the prior week.
U.S. President Donald Trump took the credit and tweeted, "Really Big Jobs Report. Great going President Trump (kidding but true)!"
The news sent the Dow Jones to its highest point total since February. The benchmark gained nearly 900 points by midday to 27,162.89. Other U.S. benchmarks also gained, as the S&P rose nearly 3% and the Nasdaq Composite added 185 points.
Some big winners today were American Airlines Group Inc. (Nasdaq: AAL) and the cruise operator Carnival Corp., & Plc (NYSE: CCL) which watched their shares rise 21% and 22%, respectively. American Airlines has continued to gain since announcing Thursday that traveling demand has picked up and that it will increase July flights. The air carrier is now trading at a 14 week high. One of the biggest losers today was Slack Technologies Inc. (NYSE: WORK), which tanked nearly 17% to $31.60 per share after reporting a net loss of $74.4 million, or 13 cents a share.
Despite the optimism in the markets today, many analysts are maintaining a cautious outlook.
"The bounceback started earlier than most expected, but don't get too excited about this one month of data. Job growth rising by 2.5 million and the unemployment rate dropping by over a percentage point are positive developments, but it's not clear how enduring this will be," Nick Bunker, an economic research director at the jobs search engine Indeed, said.
He added, "Furthermore, the labor market is still in a terrible spot with employment only 87% of where it was before the coronavirus crisis began."
While there's still more progress that needs to be made, as Ice Cube once said, "today was a good day."