May Jobs Report Shows Surprise 2.5 Million Gain in Payrolls

Plus, Vice President Pence said the Trump administration is working with Democrats in “good faith” on another round of coronavirus stimulus, airline stocks are soaring as hopes rise of a recovery for air travel, and JCPenney announced it’s closing more than 150 stores following its bankruptcy filing last month.

Stocks surged to start Friday with the Dow gaining more than 700 points, or 2.7%. The S&P 500 advanced 2.2%, while the Nasdaq traded 1.7% higher.

The May jobs report delivered a stunning surprise. The Labor Department said that payrolls rose by 2.5 million last month, bringing the jobless rate down to 13.3%. Economists had expected payrolls to drop by 8.33 million and the unemployment rate to rise to 19.5%. “It seems the damage from the nationwide lockdown was not as severe or as lasting as we feared a month ago,” said Scott Clemons, chief investment strategist at Brown Brothers Harriman. “The glimmer of hope in that [April] report, as awful as it was, was that 78% of the people who lost jobs believed that loss would be temporary. “It turns out that optimism seems to have been warranted. As the economy responded and people went back to work, the jobs were still there.” Nick Bunker, an economic-research director at jobs website Indeed, warned, however, “The bounce back started earlier than most expected, but don’t get too excited about this one month of data. Sectors hit hardest by the coronavirus are the ones seeing the largest bounce back in employment.”

Protests continued for the tenth day yesterday. House Speaker Nancy Pelosi said that nationwide unrest calls for a “very strong” change in response. “We can talk about what happened, when and what and all that, but there’s been something very – a pattern of bad behavior, in terms of how people are treated unfairly in our country,” Pelosi told CNBC’s Jim Cramer. “Let’s take this moment to be an inflection point, a pivotal one, that we are going to not just proceed incrementally but in a very strong way to do things differently.” Pelosi also told reporters yesterday that Democrats plan to introduce a police reform bill on Monday that has been drafted by members of the Congressional Black Caucus. The bill is expected to address excessive use of force, qualified immunity and racial profiling, and would mark the first federal effort to overhaul policing spurred by perhaps the biggest nationwide reckoning over racism in decades.

As coronavirus cases in the U.S. continue to tick higher, Vice President Mike Pence said that the Trump administration will have “good faith” discussions with Democrats about another round of relief following the blowout jobs report. “Those discussions are ongoing,” Pence said. “We’re going to work in good faith to put the interests of the American families and American businesses first. … We’re going to do whatever it takes to get the American people through this pandemic, and we’ve done that and we’ll continue to do that for families and small businesses, particularly businesses that have been severely impacted in our inner cities.” Meanwhile, CDC Director Robert Redfield said he’s “very concerned” the agency’s public health message on COVID-19 isn’t “resonating” with the American public. Testifying before the House Appropriations Committee, Redfield said he’s seeing “a lot of people” not wearing masks and said that while all 50 states have begun to ease physical distancing restrictions, “not all states” have met the White House’s criteria for reopening businesses. “We will continue to message as well as we can,” Redfield said. “We’re going to encourage people that have the ability to require to wear masks when they are in their environment to continue to do that.”

Airline stocks are surging higher this morning on hopes of a rebound in the U.S. economy and travel demand. American Airlines is up 20%, Delta is up 11%, JetBlue is up more than 12%, Southwest is up nearly 6%, and United Airlines is up 16% at the time of writing. Raymond James analyst Savanthi Syth said that American’s red-hot advance “reflects the elimination of bankruptcy fears” as investors grab on to hopes for a possible faster recovery in air travel after the carrier said it would boost July flights 74% compared to June yesterday. Casino stocks are also on the rise as Las Vegas casinos reopen for business since being closed since late March. Las Vegas Sands is up nearly 5% this morning, MGM Resorts International shares are up nearly 7%, and Wynn Resorts is up more than 8%. 

JCPenney announced it is closing 154 of its department stores beginning on June 12, with additional closures to be announced in the coming weeks following the retailer’s bankruptcy filing last month. “While closing stores is always an extremely difficult decision, our store optimization strategy is vital to ensuring we emerge from both Chapter 11 and the COVID-19 pandemic as a stronger retailer with greater financial flexibility to allow us to continue serving our loyal customers for decades to come,” said CEO Jill Soltau in a statement. When it filed for bankruptcy on May 15, JCPenney had around 860 stores, and employed roughly 90,000 full- and part-time workers.

Stocks We’re Watching

Titan Medical Inc (NASDAQ: TMDI): Titan Medical shares skyrocketed as much as 460% yesterday after the penny stock announced that it has entered into a development and license agreement with Medtronic to further the development of its robotic assisted surgical technologies as well as a separate license agreement with Medtronic in respect to certain intellectual property of Titan. Titan said it will receive a series of payments totaling up to $31 million for Medtronic to license its technologies, while the separate license agreement will result in an upfront payment of $10 million, with Titan retaining the rights to continue to develop and commercialize those technologies for its own business. “These agreements with Medtronic will allow Titan to continue to develop its single-port robotic surgical technologies while sharing our expertise and technologies with Medtronic,” said Titan President and CEO David McNally. “We are very excited about the opportunity to continue Titan’s pioneering work to bring new single-port surgical options to the market.”