Investing.com - Stocks soared to their highest levels in the last four weeks, in part because of perceived bad news about the economy that could lead to lower interest rates and hopes that Mexico and the United States can strike a deal over border security.
The result was that the S&P 500 closed up 1%, the Nasdaq Composite jumped 1.66%, and the Dow Jones Industrial Average rose 1%, led by Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL) and Intel (NASDAQ:INTC).
Microsoft, up 2.8%, finished with a market capitalization of about $1 trillion, tops among U.S. stocks. Today was Microsoft's second close with a $1-trillion market cap this year. The first was in April when the S&P 500, Nasdaq and Nasdaq 100 all hit record highs.
The major averages finished with the biggest one-week gains since November, with the S&P 500 up 4.5%, the Nasdaq up 4% and the Dow up 4.8%. The S&P 500 ended the week down 2.6% from its April peak. The Nasdaq is still off 5.22% from its April high. The Dow is still off 3.48% from its October 2018 all-time high,
The rally, pushed along by heavy computerized trading, was fueled by bad news. May nonfarm payrolls grew by only 75,000 while the national unemployment rate held at 3.6%, same as in April. Growth in payrolls has slowed slowly but surely since last summer, with economists suggesting the cause is the fading effects of the Trump tax bills.
The weak report increased speculation the Federal Reserve will cut interest rates to help the economy. Investing.com's Fed Rate Monitor Tool suggests an 80% chance of lower rates by September. The Fed's key rate is 2.25% to 2.5%. Interest rates moved lower. The 10-year Treasury yield fell to 2.084%, the lowest level since November 2016, ahd the dollar fell against major currencies.
There was good news, too, in the possibility of some sort of deal so the Trump administration won't impose new tariffs on goods shipped to the US from Mexico.
Oil prices also moved higher by more than 2% in part because Saudi Arabia was pushing for production cuts among OPEC members and their allies for the rest of the year. Crude oil WTI futures finished up 2.66% to $53.99 barrel. Brent, the global benchmark, was up 2.63% to $63.29 a barrel.
The rally was big and especially broad among tech stocks. Microsoft, Apple, Amazon.com (NASDAQ:AMZN), Facebook (NASDAQ:FB) and Google parent Alphabet (NASDAQ:GOOGL) were responsible for about 55% of the Nasdaq-100's 1.94% gain.
The week ahead doesn't have a lot of market-moving events on schedule. The biggest earnings report is Broadcom (NASDAQ:AVGO), due after Thursday's close and the May report on retail sales, due before Friday's open.
That said, the ongoing battles over trade and tariffs will be front and center next week and could well induce more volatility.