NFP React: Stocks boosted by Pfizer study and robust payroll report, House may vote on Biden’s plan

US stocks rallied to fresh records after both a robust payroll report showed the labor market recovery is back on track and on growing optimism the US is close to winning the war against COVID after Pfizer’s promising data with their oral antiviral treatment.  The Pfizer study showed its pill reduced risk of hospitalization or death from COVID by 89%.  Pfizer shares surged, while many COVID vaccines stocks tumbled.

A strong nonfarm payroll report will not change the Fed’s wait-and-see stance on interest rate hiking, but it will have traders fixate on next week’s inflation report.  Treasury yields continued to slide lower.  The 10-year Treasury fell 7.7 basis points to 1.450%.

The Biden administration is struggling to get the economic package and infrastructure bill passed, but we could see a House vote later today.  Changes are being made to the Build Back Better legislation and it is still unclear if the Senate will approve it.  This will get done at some point before year end and is mostly priced in by Wall Street.

NFP

The US economy saw 531,000 jobs added in October and the prior month was revised 118,000 jobs higher.  This was a strong labor market report, but it was far from perfect.  It would have been nice to see the participation rate increase, which is why you should take the larger-than-expected dip with the unemployment rate with a grain of salt.  The participation rate stayed at 61.6% and the jobless rate fell to 4.6%.

Average hourly earnings for private sector workers increased by 4.9% compared to a year ago.  The jury is still out if higher wages will lead to higher inflation, but right now it is hard to argue that it won’t.

The labor market recovery is back on track, but it will still take several months to get to maximum employment.  Alongside the Pfizer COVID pill news, this strong NFP report should ease some of the supply chain problems and that will make some investors embrace the reopening trade.

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Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya