Stocks skyrocket after unexpected drop in unemployment

Stocks skyrocket after unexpected drop in unemployment

Stock markets on Friday opened to major gains following an unexpectedly positive jobs report.

The Dow Jones Industrial Average jumped 720 points, or 2.7 percent, shooting past 27,000, and the S&P 500 bounced 62 points, or 2 percent.

The Labor Department on Friday reported that the economy added 2.5 million jobs in May, and the unemployment rate fell to 13.3 percent from 14.7 percent.

Economists had predicted that May would be the “trough” of the coronavirus-related unemployment dip, saying there may be as many as 8 million jobs lost with unemployment hitting 20 percent.

The 13.3 figure remains among the highest the nation has seen in a century, but the unexpected turnaround indicated to markets that the recovery could be quicker and much more robust than had been anticipated.

“Today’s jobs report is much-needed good news for the American labor force. It shows that hiring is picking up steam at a rapid rate,” said Josh Lipsky, Director of Programs and Policy at the Atlantic Council’s Global Business & Economics Program.

But Lipsky also said the elevated rate meant more government help would be necessary, including extensions of expanded unemployment benefits for the millions still out of work.

“It would be a dangerous mistake to think we are out of the woods,” he said.