Stock market shakes off a slump to reach more record highs

Wall Street notched more milestones Friday as the market largely shrugged off another discouraging jobs report amid expectations that the incoming Biden administration will pump more aid into the pandemic-ravaged economy.

The Standard & Poor’s 500 index rose 0.5%, its second straight record high, after bouncing back from a midday slump that knocked it down 0.5%. The Dow Jones industrial average and Nasdaq composite closed at new highs.

The Labor Department said Friday that employers cut jobs for the first time since April as the worsening pandemic led more businesses to shut down. But Wall Street remains hopeful that Washington will come through with more badly needed support for American workers and businesses after President-elect Joe Biden’s inauguration.

The S&P 500 rose 20.89 points to 3,824.68. The Dow gained 56.84 points, or 0.2%, to 31,097.97. The Nasdaq climbed 134.50 points, or 1%, to 13,201.98.

With Democrats soon in control of the presidency, Senate and House, investors are anticipating Washington will try to deliver even more stimulus for the struggling economy. That’s layering on top of expectations already built up for the economy to get healthier as COVID-19 vaccines roll out in 2021.

Treasury yields zigzagged following the release of the weaker-than-expected jobs report, but they remain on an upward trend. The yield on the 10-year Treasury rose to 1.12%. That’s up from 1.05% late Thursday and 0.90% early this week.

Stocks of smaller companies fell. The Russell 2000 index of small-cap stocks dropped 5.23 points, or 0.2%, to 2,091.66. It ended the week with a 5.9% gain, well ahead of the 1.8% gain for the big stocks in the S&P 500.

Smaller stocks tend to rise and fall more than their bigger rivals with expectations for the economy’s strength. And many investors are expecting Washington to soon try to send bigger cash payments to most Americans, spend more on infrastructure and provide other support for the struggling economy.

Another encouraging point for many investors is that Democrats will have only a thin majority in the Senate. In the optimistic case for Wall Street, that could give them enough clout to push through more stimulus for the economy but not enough to raise tax rates sharply and toughen up regulations so much that they significantly damage profits for companies.

Financial stocks gave up some of their big gains from earlier in the week, which were triggered by expectations for a strengthening economy and bigger profits from making loans at higher interest rates. Bank of America fell 1%.

On the other end was Tesla, which climbed 7.8% for the biggest gain in the S&P 500. The automaker surged more than 740% last year, and it’s climbing more amid hopes that a Democratic-run U.S. government could encourage the use of more electric vehicles. The jump pushes Tesla’s total market value past Facebook’s, and it’s now the fifth-largest stock in the S&P 500.

Japan’s Nikkei 225 rose 2.4%, its highest finish in more than 30 years. Stocks also rose in South Korea and Hong Kong. European markets ended higher.