The December unemployment results could revive the “bad news is good news” sentiment on Wall Street and increase the possibility of further government incentives, CNBC’s Jim Cramer said Friday.
According to the Labor Department on Friday, the number of non-farm workers fell for the first time since April last month as coronavirus transmission rates remain high.
“Every disappointing job number like this makes it more likely that we will get another round of government business reviews to cushion the blow,” said the Mad Money host.
While economists polled by Dow Jones predicted that the US economy would create 50,000 jobs, the results suggest that 140,000 jobs would be lost. Despite the negative slowdown in the economic recovery, stocks ended the day at record highs.
The Dow Jones Industrial Average gained almost 57 points to close at 31,097.97, an increase of 0.2%. The S&P 500 rose 0.6% to 3,824.68. The tech-heavy Nasdaq Composite outperformed both, gaining 1% to 13,201.98.
The blue-chip and broad market indexes both ended four-day winning streaks.
While the pandemic continued to rage during the holiday month, some state and local governments took steps to shut down some non-essential businesses or impose new restrictions to mitigate the spread. Meanwhile, the country continues to face challenges with introducing Covid-19 vaccines.
The greatest pain in the labor report was found in the leisure and hospitality sectors, where 498,000 jobs were lost.
President-elect Joe Biden, due to take office on Jan. 20, said Friday that he wanted to pass another stimulus package that “will be in the trillions of dollars.” Biden and Democrats, who failed to push through another billion dollar bailout prior to the November election, have a much higher chance of meeting their priorities after the party’s Tuesday runoff victories in Georgia got a Trifecta in Washington.
The Biden team plans to release more details on Thursday. Many Democrats are calling for the last payouts sent to many Americans to be increased from $ 600 to $ 2,000.
Cramer found that the housing and raw materials economy is strong. The construction industry, which is still 226,000 below its pre-pandemic level, posted a net gain of 51,000 jobs.
The unemployment rate is 6.7%.
“That means the Federal Reserve has to keep interest rates down to drive the hiring process,” Cramer said.
“When you combine the slower economy with a cautious Fed, you get a situation where stocks … are definitely the only game in town versus bonds. That means you get some longer moves up like the incredible run in Tesla. “
The electric car maker’s shares rose nearly 8% to a new closing high of $ 880.02.
The stock is experiencing an 11-day profit streak and is up 37% from its pre-Christmas level.