By Caitlin McCabe and Caitlin Ostroff
U.S. stocks jumped Thursday after the June employment report showed the economy added more jobs than expected, reassuring investors that the recovery is continuing.
The U.S. regained 4.8 million jobs last month, while the unemployment rate ticked down to 11.1% from 13.3% in May. That marked the second consecutive month that employers added jobs since massive waves of layoffs gripped the country earlier in the coronavirus pandemic. Both figures beat the expectations of economists surveyed by The Wall Street Journal.
All three major U.S. indexes finished the day and the week higher, despite seeing Thursday's gains ease in the final hour of trading. The Dow Jones Industrial Average finished the day up 92.39 points, or 0.4%, to 25827.36. The blue-chip index had initially surged nearly 470 points to start the day, rising on excitement surrounding the jobs report.
Meanwhile, the S&P 500 jumped 14.15 points, or 0.5% to 3130.01, notching its fourth day of gains. The index's rally was broad-based, with nine of the index's 11 sectors ending the day higher.
Materials and energy stocks were among the companies that led the march, with Diamondback Energy adding 5%, while Vulcan Materials climbed 4.2%.
Growth stocks rallied, too. Google parent Alphabet added 1.9% and Tesla surged 8% after the electric car maker said Thursday that its second-quarter global deliveries fell less than expected. Amazon.com, meanwhile, edged up 0.4%, helping the company to notch its ninth consecutive weekly gain -- its longest weekly winning streak on record.
Those jumps in momentum stocks pushed the Nasdaq Composite to a new all-time-high. The tech-heavy index gained 53 points, or 0.5% to 10207.63.
"This continues the trend that we've seen here of economic data coming in stronger than expected," said Jim Baird, chief investment officer of Plante Moran Financial Advisors. "It all points to a recovery that is clearly under way."
All three indexes finished the week up 3.2% or more, with both the S&P 500 and the Dow industrials seeing their largest weekly increases since the first week of June. The Nasdaq, in comparison, clinched its highest one-week gain since the week ending May 8.
Markets are closed Friday for the Independence Day holiday.
Investors said this week's increases could put stocks on track for another rally after largely being stuck in a narrow trading pattern in June.
Yet at the same time, some noted, potential obstacles to a full economic recovery loom. Even with Thursday's employment gains, the jobless rate is still at historically high levels and the U.S. labor market is operating with about 15 million fewer jobs than in February.
Even more, much of the data from Thursday's jobs report was collected in mid-June, while local economic re-openings were under way. A recent rise in coronavirus infections -- which has paused or reversed reopening plans in some states -- could dampen next month's employment gains.
Weekly unemployment claims data, which offer a more up-to-date view on the U.S. labor market, showed the number of new applications for jobless benefits fell by 55,000 to 1.43 million last week.
The number of applications for jobless benefits filed every week has come down from a peak of nearly 7 million in late March, but has stabilized near a historically high 1.5 million, signaling that companies are still cutting jobs.
Investors said they would be looking to see if June's added jobs result in an uptick in consumer spending, which accounts for roughly two-third of U.S. economic activity.
"Everybody is obviously watching the changes in the American labor market," said Florian Hense, an economist at Berenberg Bank. "The U.S. consumer is the most important driver of the global economy."
Along with any clues from the Federal Reserve, investors will also be watching in the weeks ahead to see if U.S. political leaders offer additional stimulus measures.
Jamie Cox, managing partner for Harris Financial Group, said the June jobs report suggests the Paycheck Protection Program, which was created by Congress in March to provide small businesses with payroll and expenses relief, is starting to help the economy. But, he added, investors are now focused on the "second-order effects." They are looking to see if investors are paying down debt, and where in particular they are spending.
A recent surge in coronavirus cases, however, could complicate some of those shopping plans. Apple, for example, as of Wednesday had closed 16 locations in Florida, Mississippi, Texas and Utah, with plans to shut down more locations. McDonald's is also pausing the reopening of dine-in service in the U.S.
The fast-food chain's shares fell 0.6%. Apple, meanwhile, finished the day where it started.
Beyond energy and materials companies, other groups of cyclical stocks climbed higher. Hanesbrands added 3.6%, Coty gained 3% and Las Vegas Sands rose 2.9%.
Globally, stocks also rose. The pan-continental Stoxx Europe 600 finished the day up 2%, while Hong Kong's Hang Seng Index added 2.9%. The Shanghai Composite Index gained 2.1%.
In bond markets, the yield on the 10-year Treasury note fell to 0.670% from Wednesday's 0.682%.
Write to Caitlin McCabe at email@example.com and Caitlin Ostroff at firstname.lastname@example.org