North American stock market celebrations of U.S. jobs report muted by COVID cases

TORONTO — Record daily COVID-19 infections in Florida muted some of the celebrations on North American stocks markets prompted by a stronger-than-expected U.S. jobs report.

The S&P/TSX composite index closed up 107.18 points at 15,622.40, some 206 points below its intraday high.

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In New York, the Dow Jones industrial average was up 92.39 points at 25,827.36. The S&P 500 index was up 14.15 points at 3,130.01, while the Nasdaq composite was up 53.00 points at 10,207.63 after reaching an intraday record of 10,310.36.

The U.S. markets ended their trading week higher and will be closed Friday for the Independence Day holiday.

Investors initially responded to a report indicating that 4.8 million jobs were created in June, up from 2.9 million expected by analysts. The gains prompted the unemployment rate to fall to 11.1 per cent from 13.3 per cent in May.

"That's a big difference and a strong vote of confidence for the U.S. economy," said Anish Chopra, managing director with Portfolio Management Corp.

The best monthly jobs performance since the government began keeping records in 1939 followed the end of mass lockdowns designed to curtail the spread of the novel coronavirus.

The employment picture was muddled, however, by the weekly report indicating that the number of jobless claims rose by 1.4 million while the number of people receiving unemployment benefits increased by 59,000 to reach 19.3 million.

Chopra said the overall jobs picture is representative of the economy returning to normal, three months after some questioned whether that would take place so quickly.

Markets pared some of the strong gains after Florida announced that a record of more than 10,000 residents were diagnosed with the virus.

"When you look at what's happened today, strong U.S. job numbers are just propelling global markets higher and there's just some concerns in the background about a resurgence of coronavirus cases and continuing U.S. jobless claims," he said in an interview.

On Wednesday, the U.S. also reported a record of more than 50,000 cases in one day.

Chopra said investors are generally overlooking negative news about COVID infections because they believe that politicians and the Federal Reserve will respond if markets and the economy falter from future lockdowns.

"So generally it's the old expression that good news is good news and bad news could be good news too."

Nine of the 11 major sectors of the TSX were higher in a broad-based rally that eased near closing.

Technology led, gaining 3.7 per cent as Lightspeed POS Inc. and Shopify Inc. surged 13.9 and 8.4 per cent respectively.

"The Canadian tech sector is just following the leadership of the U.S. tech sector which has been very, very strong over the last number of months with the work-from-home theme," Chopra said.

Real estate and energy were also higher.

An increase in crude oil and natural gas prices moved energy up 1.5 per cent with Seven Generations Energy Ltd. gaining nearly 15 per cent.

The August crude contract was up 83 cents at US$40.65 per barrel and the August natural gas contract was up 6.3 cents at US$1.73 per mmBTU.

Materials was down 1.3 per cent despite higher metals prices with Oceangold Corp. down six per cent and First Majestic Silver Corp. off 4.4 per cent.

The August gold contract was up US$10.10 at US$1,790.00 an ounce and the September copper contract was up 1.45 cents at nearly US$2.75 a pound.

Industrals also swung lower as flight simulator company CAE Inc. decreased 5.1 per cent.

The Canadian dollar traded for 73.61 cents US compared with 73.38 cents US on Tuesday as Canadian exports rose in May although imports decreased on supply challenges.

This report by The Canadian Press was first published July 2, 2020.

Companies in this story: (TSX:VII, TSX:OGC, TSX:FM, TSX:LSPD, TSX:SHOP, TSX:CAE, TSX:GSPTSE, TSX:CADUSD=X)

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