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Wall Street set to open higher on surprise drop in unemployment rate

FILE PHOTO: Traders wear masks as they work on the floor of the New York Stock Exchange as the outbreak of the coronavirus disease (COVID-19) continues in the Manhattan borough of New York, U.S., May 27, 2020. (REUTERS/Lucas Jackson)

BY DEVIK JAIN

The S&P 500 and Dow Jones indexes were set to jump at the open on Friday after a closely watched report showed a surprise drop in the U.S. unemployment rate, lending weight to hopes of a faster economic rebound from a coronavirus-driven slump.

The unemployment rate unexpectedly fell to 13.3% in May from 14.7% in April and layoffs abated, the Labor Department said on Friday. Economists polled by Reuters had forecast the jobless rate jumping to 19.8%.

Interest-rate sensitive stocks including Bank of America Corp, Citigroup Inc and JPMorgan Chase & Co jumped between 3.8% and 8.8% as U.S. Treasury yields rose after the data. [US/]

“This is completely out of expectations,” said Subadra Rajappa, head of U.S. rates strategy in Societe Generale, New York.

“This is a tremendously positive step in the right direction, and probably points to a faster recovery, at least in the jobs market, than people had expected.”

Wall Street has rebounded sharply from a coronavirus-driven crash in March as investors bet on a revival in business activity following the easing of a nationwide lockdown.

The Nasdaq Composite, S&P 500 and Dow Jones indexes are now down about 2%, 8%, and 11% from their respective all-time highs.

At 8:56 a.m. ET, Dow e-minis were up 630 points, or 2.4%, S&P 500 e-minis were up 47.25 points, or 1.52% and Nasdaq 100 e-minis were up 4.75 points, or 0.05%.

Boeing Co gained 8.0% premarket on hopes of a pickup in air travel a day after American Airlines Group Inc and United Airlines said they would boost their U.S. flight schedule next month. American Airlines surged 27.3% and United Airlines jumped 20.6%.

Fears of more disruptions from social unrest have also eased in the past two days, with the largely peaceful protests against the killing of a black man in police custody waning into Friday morning and emergency curfews in many cities being lifted.

Vaccine maker Novavax Inc jumped 10% after saying it would receive up to $60 million from the U.S. Department of Defense to fund manufacturing of its COVID-19 vaccine candidate.

Apparel retailer Gap Inc gained 2.1% even as it reported a quarterly loss of nearly $1 billion due to coronavirus-induced store closures.

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