Stocks Advance Despite Disappointing Non Farm Payrolls Report

The Stock Market Continues To Move Higher

S&P 500 futures are gaining ground in premarket trading and stocks look ready to test new highs as traders expect new stimulus after Democrats received control of the Senate.

The rally of Tesla stock, which was included into S&P 500 a few weeks ago, also boosts market sentiment. Yesterday, Tesla shares were up by 8%, and the stock is currently gaining about 5% in premarket trading.

The stimulus optimism offset all potential negative catalysts which included the recent unrest in Washington, rising coronavirus cases and deterioration of U.S. – China relations.

Meanwhile, safe-haven assets like U.S. government bonds and precious metals  are under pressure as traders prefer to buy riskier assets.

Oil Moves Towards The $52 Level

WTI oil gained strong upside momentum and is moving towards the $52 level as traders cheer Saudi Arabia’s decision to cut production by 1 million barrels per day (bpd) in February and April.

Oil is also supported by the growing appetite for riskier assets amid expectations of a robust economic recovery in 2021.

Interestingly, the near-term oil demand picture looks bad as European countries had to extend lockdown measures. However, traders remain focused on the longer-term picture which is good for oil-related stocks which are set for another strong trading session.

Non Farm Payrolls Report Disappoints

The U.S. has just provided Non Farm Payrolls and Unemployment Rate reports.

The Non Farm Payrolls report showed that the economy lost 140,000 jobs in December while analysts expected that employment would grow by 71,000.

On Wednesday, ADP Employment Change report indicated that private businesses fired 123,000 workers in December so it was clear that the second wave of the virus put significant pressure on the job market. In this light, the Non Farm Payrolls data is not surprising.

The Unemployment Rate remained unchanged in 6.7% in December while analysts predicted that it would increase to 6.8%. The market would likely focus on the Non Farm Payrolls report but it remains to be seen whether the recent job market data will put any pressure on stocks.

For a look at all of today’s economic events, check out our economic calendar.