After taking just a short breather from a week of run-ups yesterday, the S&P 500 came back with a vengeance to close the week on Friday. As of 10:50 a.m. EDT, this broad gauge of the health of the stock market is up more than 2%, with industrial stocks like Harley-Davidson (NYSE:HOG), Middleby (NASDAQ:MIDD), and Alcoa (NYSE:AA) leading it higher.
Harley-Davidson is up 3.7%, after posting gains of nearly 8% earlier in the day. Middleby is up 10% (but was up 15%), and Alcoa is hanging onto a 3.9% gain after surging more than 19% higher this morning.
What do a motorcycle maker, a manufacturer of commercial kitchen ovens, and an aluminum producer have in common? None of these three stocks has anything of particular note on its news feeds happening today -- no earnings reports, no analyst upgrades, nor even a changed price target. Instead, all three appear to be responding to purely macroeconomic headline news.
This morning, the Bureau of Labor Statistics reported that 2.5 million jobs had been added to U.S. payrolls in the month of May. That's a huge number, made all the more huge in comparison to economists' prediction of a 7.2 million decline in jobs. Additionally, an unemployment rate that was approaching 15% nationally has turned tail and retreated to 13.3%.
Adding to investors' ebullience, late yesterday New York Mayor Bill de Blasio confirmed that New York City will begin its planned Phase 1 of reopening on Monday, and is on track to reach Phase 2 by early next month.
As businesses are permitted to reopen and jobs come back, consumers will have more income to spend on discretionary purchases such as motorcycles and eating out. As restaurants see more business, they'll have money to buy new equipment for their kitchens. And as more ovens, refrigerators, and so on are manufactured, demand for metals such as steel and aluminum will rise.
It will be a long, slow march for the economy to get back to normal, but the first steps have been taken.