Market Recap: Friday, May 8

On Friday, the major averages ended near session highs, after new data revealed the coronavirus pandemic sparked a historic labor market collapse in the world’s largest economy last month, but at a pace below expectations.Jen Rogers, Myles Udland and Rick Newman break down the day's market action.

Video Transcript

JEN ROGERS: Welcome back to Yahoo Finance. We are heading to the closing bell here on this Friday. Looking right near session highs right now. Of course, this comes after a jobs report that was just pretty dismal. Some of the words out there describing it tragic. Myles Udland just call it grizzly. But the market here brushing all of that off as we head higher right now.

The NASDAQ, you can see-- we've been talking about this a lot. Not our outperformer today, but still continuing to have gains here in tech. Also a big week for crude. Crude really seems to have found some footing here, up about 20% on the week. The VIX as well-- remember that? It was above 80. Well, the VIX below 30 for the day.

[BELL RINGS]

Energy up more than 4%. The laggard, health care, up only just about a half of 1%. I want to bring in my co-host, Myles Udland. So Myles, the jobs report-- again, I know you said grizzly. We've got tragic. We had an economist on the last hour who called it the darkest day. And yet, investors seem to be able to see through the darkness of this number, this print, and are looking at the recovery already. The market is a forward-pricing mechanism, and it's not pricing what's happening today. It just seems to look through. How does it continue to do that?

MYLES UDLAND: Well, I mean, I think-- you know, I think what the market has done-- and this is what you have to do as an investor, is you have to break out what you know and what you don't know. And I think the market is pricing in what can be known. And basically, that comes down to, here's what the Fed has done. Here's how much money has been authorized to disburse to consumers. Here's how many unemployment benefits are available to consumers through the end of July. So these are things that we know are going to happen.

What we don't know is, will employment rebound in the summer? Will S&P earnings fall 30% or 90%? How many companies will go bankrupt? Will there be a fifth round of stimulus, and so on. Those are all unknown questions. But I think each of those questions has answers that could be very negative for stock prices in the future and may well be negative for stock prices at some future date.

But given what we know right now, how swiftly the Fed has acted, the amount of liquidity-- I mean, there will not be a liquidity crisis in this market. The Fed has made sure of that. And that was obviously the fear from 2008. So how much that will sustain remains to be seen. But it has certainly been enough to get the market off of its absolute lows, because remember, the market started turning down way before case counts accelerated even here in New York.

The market bottom was March 23. And I don't even think we've taken out the March 23 number of daily new cases in New York City, and we're talking about how positive things are here in the city. More people are getting sick today than were getting sick at the market bottom. So we have seen a significant turnaround in what the market can buoy itself with, I guess.

And it really comes down to, all it knows is the Fed is not going to let this thing turn south if it can help it. And so we're going to have this conversation in September about, what does the fall look like? What does the holiday season look like? Have people actually gotten those jobs back? But today, the market is at least saying, well, the Fed is doing as much as it can to make those things possible, and we'll worry about those when we get there.

JEN ROGERS: Rick Newman, when we get there, many of these people think that they will have their jobs back. In fact, the vast majority of them think that. Economists pointing to that as the silver lining. Capital Economics noting that in a normal recession, nearly all the unemployed are permanent job losers.

But that does not-- that's not the expectation here right now, right? The expectation is that the government's come in. Some people right now are getting paid more than they were on their jobs to stay home, and that that will stimulate the economy. So the economists-- I mean, even though we had Chris Rupkey on from MUFG calling it the darkest day. Even he sees it as something that we can come back from inevitably, despite the numbers and the sheer scale of this print today.

RICK NEWMAN: Probably the most crucial thing in the economy right now is what you're describing, is getting those people back to work and sustaining those businesses, keeping them open, and getting them reopened. And to my mind, the market is pricing in perfection here. The market is basically assuming that all of that is going to happen, and it's going to happen fairly quickly-- that we are going to get gradual reopenings in states that are going to accelerate over the summer, we're not going to get a surge or a resurgence of the virus or new cases in places that have been fairly lightly touched, and this is all going to go fairly smoothly and consistently into the fall.

I think there's a very strong likelihood that that does not happen and we have a lot of interruptions in this recovery, in this path back. But I mean, nobody knows. This is just a complete-- it's a known unknown at this point. Are these people going to go back to work or are they not going to have jobs on the other side of this?