In the face of the worst economic report in years, the Dow reversed a steep selloff Friday and soared nearly 300 points higher.
The latest dramatic move on Wall Street came despite the fact that deep recession fears were bolstered by a new report showing the nation lost more than half a million jobs in November as the unemployment rate surged to 15-year highs.
Today's Market
The Dow Jones Industrial Average jumped 259.18 points, or 3.09%, to 8635.42, the S&P 500 added 30.85 points, or 3.65%, to 876.07 and the Nasdaq Composite jumped 63.75 points, or 4.41%, to 1509.31. The consumer-friendly FOX 50 gained 20.70 points, or 3.10%, to 689.22.
The markets appeared to be on pace to add to Thursday's triple-digit selloff as stocks initially tanked on the job-loss report before enjoying a late-day comeback.
“Everyone knew we were going to get a bad number….At some point, the markets just shrug it off,” NSYEtrader Ted Weisberg of Seaport Securities told FOXBusiness. "We could be in a period where the headline economic news remains quite negative but the market puts on a positive performance.”
Wall Street's performance didn't just come in the face of the terrible jobs report. Stocks also rose despite the fact that no clear path emerged from a second day of testimony by the Big Three auto makers in Washington and a new report showing roughly 10% of homeowners with a mortgage were behind or foreclosed on at the end of last quarter.
The November jobs report "was definitely the worst I’ve seen in my 25 years of trading. Those numbers could hit double-digit unemployment if things don’t go right in Congress. Corporate America knows we are in a big storm and they are preparing for the worst,” said Anthony Conroy, head trader at BNY ConvergEx. “The good news is that we’ve been in a recession for 12 months and it doesn’t last forever."
Financial giants Bank of America (BAC) and JPMorgan Chase (JPM) led the charge up on the blue-chip index, followed closely by defensive stocks like Merck (MRK) and Kraft(KFT). General Motors (GM) and AT&T (T)were the only two blue-chip stocks that failed to join in the rally.
The Nasdaq Composite soared nearly 4.5%, lifted by strong gains from tech giants like BlackBerry maker Research in Motion (RIMM)and Oracle (ORCL). SanDisk (SNDK)and Leap Wireless (LEAP) were two of the biggest percentage gainers on the Nasdaq 100.
While the equities markets soared, commodities continued their downward spiral.
Fears of a deep recession shoved crude oil to its sixth consecutive losing session and to depths unseen since December 2004. Crude oil ended down $2.86 to $40.81 a barrel.
Friday marked the commodity's sixth consecutive losing session. Amid a quickly deteriorating economic picture and predictions of $25 a barrel oil, crude has lost more than 25% of its value in just over a week. Oil prices have plummeted more than $100 since hitting all-time highs of $145 a barrel in July.
Markets Withstand Bleak Economic Picture
The Labor Department said the U.S. lost 533,000 jobs in November as employers slashed jobs at the fastest rate in 34 years. The number significantly worse than the 325,000 layoffs economists had forecasted and even eclipsed Wall Street's fears of 450,000 job losses. The government said the nation's unemployment rate soared to 6.7%, up from6.5% the month before and well above the 5% level seen as recently as April.
The U.S. has seen 11 consecutive months of negative job growth and over the past three months alone more than 1.2 million jobs have disappeared. The government also sharply cut its estimates for both September and October's employment picture, saying an additional 200,000 jobs were lost during those already dismal months.
“We are looking at something we knew was going to get worse before it gets better. We get to a juncture where we’ve priced some of the negativity into the marketplace," said Art Hogan, chief market strategist at Jefferies&Co.
Even still, the bleak labor situation will likely only worsen consumer sentiment, which remains at or near historical lows. Consumer spending, which accounts for more than two-thirds of the nation's GDP, stands to continue to shrink.
Meanwhile, the Mortgage Bankers Association said a record one in 10 American homeowners with a mortgage were either behind in payments by a month or in foreclosure at the end of the third quarter. Foreclosure rates may rise further in the current quarter due to the deteriorating economy.
The biggest bright spot of the day was clearly the insurance group, which surged after Hartford Financial Services (HIG) raised 2008 profit forecast, sending its stock soaring more than 100%. The news helped send rivals MetLife (MET) and Prudential (PRU) soaring as well.
Auto Bailout Ahead?
For a second day in a row, the future of the American auto industry appeared to hang in the balance in Washington. The executives of General Motors (GM), Ford (F), and privately-held ChryslerLLC again asked lawmakers for $34 billion in emergency loans and warned that without the funds the industry may collapse, causing a depression.
It's not yet clear if Detroit's latest sales pitch will be enough to convince bailout-fatigued lawmakers to sign off on the emergency loans. Congressional Republicans, especially those in the House, are said to be very reluctant to pass auto-rescue legislation and many Democrats have expressed concerns as well.
Corporate Movers
Boeing (BA) may be forced to delay delivery of its 787 Dreamliner by at least six more months due to the recent machinists strike and other issues, The Wall Street Journal reported. Boeing is expected to delay first deliveries until summer 2010, two years later than originally scheduled, the newspaper reported.
Merrill Lynch's (MER) takeover by Bank of America (BAC) received shareholder approval from both banks on Friday, paving the way for BofA to become the largest U.S. bank with $2.7 trillion in assets. The deal, which is worth $19.7 billion as of Thursday, down from $50 billion when proposed due to BofA's plunging share price, still needs regulatory approval.
Citigroup (C) finalized a deal to sell Citibank Germany to French mutual bank CM-CIC for $6.7 billion in cash. Citi sees an after-tax gain of about $4 billion.
World Markets
European stock markets closed sharply lower Friday as the Dow Jones Euro Stoxx 50 slid 116.63 points, or 4.92%, to 2252.09 and London's FTSE 100 ended down 114.24 points, or 2.74%, to 4049.37. France's CAC 40 Index fared even worse, losing 173.15 points, or 5.48%, to close at 2988.01.
In Asia, Japan's Nikkei 225 fell 6.73 points, or 0.08%, to 7917.51 and Hong Kong's Hang Seng jumped 336.31 points, or 2.49%, to 13846.09.
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