US Stocks Close Short Week On A High After Jobs Report Beats Expectations

The S&P 500 continued its run-up yesterday following an expectation-beating US jobs report, which showed 4.8 million nonfarm payrolls were added in June. The unemployment rate also fell to 11.1%, with both figures beating economists’ consensus expectations. Forecasts had been for 3.7 million new nonfarm payrolls and an unemployment rate of 12.5%. During the shortened four day trading week (the US is closed today for Independence Day), the S&P 500 has gained 4% and is now within 3% of where it started the year.

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Asian shares continued the momentum overnight, hitting four month highs as optimism from the US jobs report spilled over, Chinese PMI data showing that consumer demand is beginning to return post lockdown is also encouraging.

American Airlines also made headlines yesterday, after announcing that it is currently overstaffed by 20,000 employees for its fall schedule. All of the major US airlines are looking at staff cuts in the face of reduced travel demand, but under the terms of a federal aid package are not able to lay off staff or reduce pay until the end of September. American Airlines said that during June, it reduced the amount of cash it has been burning through from $100m a day in April to sub-$35m a day in June. The firm’s stock sank 2.4% yesterday, and remains down more than 50% year-to-date, even after a 24.3% gain over the past three months.

Insurance startup Lemonade doubles share price after billion dollar IPO

All three major US stock indices performed almost identically on Thursday, with gains of 0.4% to 0.5%. In the S&P 500, the materials sector was out in front with a 1.9% gain, led by construction materials stocks. Real estate management and development stocks also jumped 1.5%, although real estate investment companies fell 0.4%.

In corporate news, online home insurance company Lemonade (LMND)  hit headlines on Thursday after making its public market debut. The firm raised $319m through an IPO on the New York Stock Exchange, valuing the company at $1.6bn. Yesterday, the first full day of trading, the company’s share price climbed by more than 100%. Similar to many of the billion dollar plus IPOs of recent years, the company is loss-making but has been posting rapid revenue growth. There have been several multi-billion dollar IPOs in the US so far this year, despite the disruption caused by Covid-19; they include business software firm ZoomInfo (ZI), Chinese cloud computing firm Kingsoft and health-tech company One Medical.

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