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Wall St extends record rally on strong jobs report, Pfizer COVID-19 pill cheer

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., October 20, 2021.
REUTERS/Brendan McDermid

Wall Street’s main indexes hit record highs in a broad-based rally on Friday as data showing strong jobs growth in October, coupled with Pfizer’s COVID-19 pill update, bolstered sentiment about economic growth.

Ten of the 11 major S&P sectors advanced, with three of them gaining more than 1% each. The small-cap Russell 2000 index added 1.6%, also scaling a record peak.

The Labor Department’s report showed U.S. employment increased more than expected last month as COVID-19 infections over the summer subsided, although worker shortages continued to boost wage growth, with annual hourly earnings increasing to 4.9% in October.

“Although (the data) bodes well for the recovery in the U.S., the rise in earnings year on year of 4.9% does highlight worries about wage inflation,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

“But the numbers aren’t likely to be hot enough to blow the Federal Reserve off its course of gradually tapering its stimulus programme.”

Pfizer Inc surged 7.9% after the drugmaker’s experimental antiviral pill for COVID-19 cut by 89% the risk of developing severe disease.

Shares of Merck slipped 9.6%, dragging the S&P healthcare sector lower.

Travel stocks rose following Pfizer’s announcement, with the S&P 1500 Airlines index climbing 6.5% and cruise operators Carnival Corp, Royal Caribbean Cruises and Norwegian Cruise rising about 9% each.

“Still early to be definitive but this (pill) looks like a true game changer for many industries like leisure and transportation, you’re seeing it reflected in the prices,” said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey.

“Earnings for the most part are fairly strong, promising. It’s not a perfect world out there but by and large the numbers are good.”

Among earnings-driven moves, Expedia jumped 14.5% after the online travel agency posted upbeat third-quarter revenue, while Pinterest Inc climbed 7.1% on a strong fourth-quarter revenue forecast.

A stellar third-quarter reporting season, coupled with a cheery outlook on earnings growth as well as a central bank in no rush to hike interest rates, has boosted investor appetite for equities recently.

Meanwhile, President Joe Biden on Friday urged U.S. lawmakers worried about rising inflation to pass the infrastructure and domestic spending bills currently before the House of Representatives.

At 12:03 p.m. ET, the Dow Jones Industrial Average was up 226.01 points, or 0.63%, at 36,350.24, the S&P 500 was up 26.88 points, or 0.57%, at 4,706.94, and the Nasdaq Composite was up 92.12 points, or 0.58%, at 16,032.43, scaling the 16,000 mark for the first time.

Shares of so-called ‘stay-at-home’ names like Zoom Video Communications and Netflix Inc dropped 6.6% and 1.9%, respectively.

Peloton Interactive Inc sank 34.0% after it slashed its full-year sales outlook by up to $1 billion.

Advancing issues outnumbered decliners by a 2.48-to-1 ratio on the NYSE and by a 1.44-to-1 ratio on the Nasdaq.

The S&P index recorded 82 new 52-week highs and two new lows, while the Nasdaq recorded 282 new highs and 58 new lows.

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