The major stock market indices closed sharply higher on Friday and ended the week with gains of around 2%. May’s jobs report offered a major surprise that supported stocks.
May nonfarm payrolls rose 339,000 better than expected, compared to the 190,000 Econoday consensus. Private payrolls increased by 283,000 versus the expected 165,000, while manufacturing wages fell by 2,000 versus an expected increase of 8,000.
The unemployment rate ticked up to 3.7%, higher than the forecast of 3.5%.
The U.S. Senate passed the bill to raise the debt ceiling on Thursday night and is now awaiting President Biden’s signature.
The 10-year US Treasury yield added 8 basis points to 3.69%. The CME FedWatch tool shows a roughly 75% chance of no rate hike at the June Federal Reserve meeting, and the rest of the Fed watchers expect a rate hike of a quarter point.
Stock Exchange Meetings In Afternoon Trading
The Nasdaq gained 1.1%. The Dow Jones Industrial Average showed the most strength, rising 2.1% and reclaiming its 50-day moving average in a bullish fashion. The S&P 500 rose 1.5%.
The iShares Russell 2000 ETF (IWM) outperformed the major indices by 3.6%. According to Dow Jones Market Data, the Dow and Russell 2000 posted their best daily gains since November. The Dow posted a gain of 701 points for the day.
The Dow and Nasdaq each posted 2% weekly gains, and the S&P 500 followed them with 1.8%.
The First Trust Nasdaq 100 Equal Weighted ETF (QQEW) rose 1.1%, indicating broader participation in the rally.
The Nasdaq 100-tracking Invesco QQQ Trust ETF (QQQ) rose 0.8%. And Innovator IBD 50 ETF (FFTY) climbed 1.9%.
NYSE and Nasdaq volume fell slightly from the same time on Thursday, according to preliminary data.
Crude oil rose 2.6% to $71.92 a barrel. Gold futures fell 1.5% and remained below the psychological level of $2,000 an ounce. Bitcoin price, meanwhile, rose 1.7% to $27,375.
Stock Market Earnings Movers: MongoDB Earnings Up 180%
IBD 50 stock Broadcom (AVGO) rose 2.8% after reporting stronger-than-expected revenues and sales in the second quarter. It gave Q3 revenue guidance above analysts’ forecasts. Shares are in the 20% gain zone from a flat base with a buy point of 648.60.
Lululemon Athletica (LULU) rose 11.3% in heavy volume after reporting higher-than-expected Q1 adjusted earnings per share and revenue. Same-store sales grew 13% year-over-year. Stocks of the retailer of sportswear and yoga wear rose 24%.
Stocks pulled back from larger morning gains, but are still on track to regain their 50-day moving average.
IBD 50 stock MongoDB (MDB) skyrocketed 28% in strong volume after handily beating April quarter’s adjusted earnings and revenue. It also raised its earnings per share and sales forecasts for the fiscal year. MongoDB’s revenue was up 180% over the same period last year to 56 cents per share.
IBD 50 stock Asana (ASAN) returned lower, falling 2.8% in heavy volume, after reporting a smaller-than-expected loss for the quarter that ended Thursday at the end of April.
Cloud connectivity provider Samsara (IOT) skyrocketed 27.9% after reporting a smaller-than-expected Q1 loss and higher revenue. The stock broke out of a base and cleared the buy point of 22.69 in heavy trading.
EV charging stock Charging station (CHPT) fell 7% after reporting a larger-than-expected Q1 loss and a hit to sales late Thursday. Management’s second-quarter revenue guidance was lower than analysts’ estimates.
Breakout Movers: Cathie Wood adds more of this stock
Other Friday stock market breakouts included UiPath (PATH), which surpassed the 18.22 buy point of a Cup base. Shares gained 1.7% and are at the bottom of the 5% buy zone, which runs through 19.13.
The move came after news that Cathie Wood, CEO of Ark Invest, was selling shares of Nvidia (NVDA) and bought more PATH for its ARK Innovation ETF (ARKK). PATH is the fourth largest holding in the fund.
Extreme networking [ticker symb=EXTR] jumped 4.9% and broke out of a saucer base with a buy point of 21.13. Shares hit an all-time high on Friday. EXTR has been on an upward trend since the networking software company reported better-than-expected revenues and sales on April 26 and raised its revenue expectations for the June quarter above analyst estimates.
Aehr test systems (AEHR) peaked at 7.3%, breaking out of a cup base with a buy point of 40.79. The move came after the maker of semiconductor test systems announced that an unnamed new customer had placed an order for a system that makes silicon carbide metal transistors for vehicles. Analysts expect earnings per share growth of 51% in the fiscal year ended May, and an impressive 77% increase in the following fiscal year.
ATI (ATI) climbed 6.9% and broke past a trendline as it finally regained its 50-day line. The entry is around 37 and the stock is still forming a double bottom with an entry of 39.93.
The specialty metals business surged after the Senate passed the debt ceiling bill, sparking renewed economic optimism. Separately, China would be working on ways to boost its real estate market, which could boost demand for industrial metals.
Sell telecom stocks
Telecommunications stocks took a hit after a Bloomberg report Amazon (AMZN) is in talks with mobile carriers to offer low-cost or free cell phone service to its US Amazon Prime members. But Amazon and Verizon communications (VZ) denied the report. T-Mobile US (TMUS) also reportedly denied having any talks.
AMZN rose 1.2%, while T-Mobile fell 5.6%, AT&T (T) fell 3.8% and Verizon lost 3.2% on the news. Verizon is the Dow’s biggest loser today.
An article in the Wall Street Journal previously reported on that provider of wireless and satellite services dish network (DISH) was in talks to sell its wireless plans to Amazon. DISH catapulted 16.2% in heavy volume today.
Follow Kimberley Koenig for more stock market news on Twitter @IBD_KKönig.
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