Stocks rally as jobs report overshadows rising bond yields

U.S. equity markets charged higher Friday as the better-than-expected February jobs report sent bond yields higher.

The Dow Jones Industrial Average gained 306 points, or 1%, while the S&P 500 and the Nasdaq Composite climbed 0.96% and 0.84%, respectively.

U.S. ECONOMY ADDS ROBUST 379,000 NEW JOBS

The U.S. economy added 379,000 jobs in February as the unemployment rate ticked down to 6.2%, according to the Labor Department. Economists surveyed by Refinitiv were anticipating the addition of 182,000 jobs as the unemployment rate to hold steady at 6.3%.

The strong report caused the 10-year yield to climbed to 1.63%, its highest level in a year, before easing. At that level, the 10-year yield is above the S&P 500’s dividend yield.

Friday’s rally comes a day after Federal Reserve Chairman Jerome Powell said the central bank would remain patient if inflation were to return. That caused bond yields to rise which led to selling in equities, especially growth stocks, pushing the Nasdaq Composite to the brink of a correction, or down at least 10% from its recent peak.

In stocks, technology names sensitive to a continued rise in bond yields remain under scrutiny.

Meanwhile, Chevron Corp. agreed to buy the remaining shares of Noble Midstream Partners LP that it does not already own in a deal that values the pipeline operator at $1.32 billion. Noble Midstream shareholders will receive 0.1393 Chevron shares for each Noble Midstream unit they own.

In earnings, Costco. Co. reported stronger-than-expected quarterly revenue as online sales soared 76% year over year as the shop-from-home trend continued amid the COVID-19 pandemic. Earnings, meanwhile, fell short of estimates as costs rose as a result of wage increases for frontline workers.

Gap Inc. forecast sales will normalize to pre-pandemic levels in the second half of the year as people return to the office. The retailer sees sales increasing by a mid- to high-teens percentage compared with 2020.

Elsewhere, Virgin Galactic Holdings Inc. Chairman Chamath Palihapitiya sold his entire personal stake in the company for $213 million. Palihapitiya and his partner Ian Osborne still own a 6.5% stake through the investment firm Social Capital Hedosophia.

Norwegian Cruise Line Holdings Ltd. announced plans for a 47.58 million share offering. The cruise line operator plans to use the proceeds to retire debt.