U.S. economy created 145,000 jobs in December for ninth straight year of job gains but wage growth slowed
Stocks ended lower Friday, after the Dow briefly topped the 29,000 milestone, with investor euphoria over recent record highs deflated by data showing slower-than-expected U.S. jobs and wage growth in December.
How did the benchmarks perform?
The Dow Jones Industrial Average DJIA, -0.46% lost 133.13 points, or 0.5%, to end at 28,823.77, while the S&P 500 index SPX, -0.29% fell 9.35 points, or 0.3%, to close at 3,265.35. The Nasdaq Composite Index SPX, -0.29% closed down 24.57 points, or 0.3%, at 9,178.86.
All three major benchmarks indexes set new intraday highs Friday and the main indexes all posted gains for the week despite Friday’s weak close. The Dow saw a 0.7% weekly advance, while the S&P 500 rose 0.9% and the Nasdaq gained 1.8%.
On Thursday, the Dow gained 211.81 points, or 0.7%, to close at 28,956.90, while the S&P 500 index rose 21.65 points, or 0.7%, to 3,274.70. The Nasdaq Composite Index added 74.18 points to finish at 9,203.43, a gain of 0.8%.
What’s was driving the market?
The U.S. Labor Department said the U.S. economy added 145,000 new jobs in December, below the 165,000 expected by economists and less than the 266,000 gain in the prior month The unemployment rate, meanwhile, held near a 50-year low at 3.5%.
“While disappointing on the headline, today’s payroll miss is unlikely to change the outlook for the U.S. economy as the results are consistent with economic output chugging along at trend pace,” said Charlie Ripley, senior investment strategist for Allianz Investment Management. “Overall, today’s report is a precursor to what we can expect in 2020, an economy extending the current expansion at a moderate pace.”
However, growth in average hourly earnings came in below expectations, rising 0.1% from December, versus a 0.3% expected by economists. Revisions to prior months’ estimates were also negative, with October gains revised down from 156,000 jobs to 152,000 jobs and the November increase from 266,000 to 256,000.
“A miss is a miss, and the downward revisions to November and October’s figures are disappointing. But at this stage of the economic cycle, the U.S. is still enjoying an impressively strong pace of job growth,” said Ulas Akincilar, head of trading at online trading platform INFINOX.
“Of greater concern is the slowing pace of wage growth — which slipped to 2.9% in 2019 as a whole — and could steadily become a brake on the wider U.S. economy,” he said.
Investors were also digesting an announcement by the Trump administration of fresh economic sanctions on Iran, following an attack on U.S. military facilities in Iraq that was in retaliation for the killing of a top Iranian general by U.S. forces last week. The sanctions target eight “senior Iranian regime officials” as well as the nation’s steel, aluminum, copper and iron industries, according to the Treasury Department.
Meanwhile, a Chinese delegation is expected to arrive in Washington on Monday to complete a phase-one trade agreement with the U.S., which has arguably been the most influential driver of stock moves for more than a year. President Donald Trump said he wants a partial trade deal signed by Jan. 15 or shortly thereafter.
Which stocks were in focus?
Shares of KB Home KBH, -3.24% fell 3.2% Friday after the home builder reported fourth-quarter earnings late Thursday. Total revenue rose to $1.56 billion from $1.35 billion a year ago. Analysts were looking for $1.61 billion.
Boeing Co. BA, -1.91% released internal communications that revealed how employees persuaded airline and government officials to conclude that flight-simulator training wasn’t necessary for the 737 MAX. Shares fell 1.9%.
Spirit AeroSystems Holdings Inc., SPR, -4.25%, which supplies Boeing Co. 737 Max jets with fuselage, wing components, and other major structures, said Friday it would lay off about 2,800 workers at its Kansas plant and plan more layoffs in the coming weeks. Shares fell 4.3%.
Shares of Grubhub Inc. GRUB, -6.01% fell 6% after the food-ordering company said isn’t looking to be sold, countering reports from the New York Post that had suggested otherwise.
Eli Lilly & Co. LLY, +1.53% announced a deal Friday to purchase Dermira Inc., a medical dermatology company, for $1.1 billion. The stock closed up 1.5%
Shares of Six Flags Entertainment Corp. SIX, -17.82% plummeted 17.8% Friday, their biggest-ever one-day decline after the theme park operator warned of a fourth-quarter revenue shortfall and said its partner in China has defaulted on its agreements.
How are other markets trading?
Treasury yields slipped on haven buying Friday, following a tepid December jobs report and the announcement by the U.S. of new sanctions against Iran. The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, -2.02% fell 3.3 basis points to 1.825% during Friday trade.
Oil futures declined on Friday, with prices posting their biggest weekly percentage fall in at least five months, as fears of a wider U.S.-Iran confrontation faded and data earlier this week showed a rise in U.S. crude inventories. West Texas Intermediate crude oil CLG20, -0.74% fell 52 cents, or 0.9%, to $59.04.
Gold futures ended higher Friday, finding support from weaker-than-expected monthly U.S. jobs data to score a third weekly climb, even as easing tensions in Middle East worked to dull haven demand for the precious metal. Gold for February delivery GCG20, +0.57% advanced $5.80, or 0.4%, to settle at $1560.10.
The U.S. dollar’s DXY, -0.10% value was up 0.1% Friday, relative to a basket of its major rivals.
In Asia overnight, stocks mostly gained, with Hong Kong’s Hang Seng Index HSI, +0.27% rising 0.3%, the China CSI 300 000300, -0.03% declining less than 0.1% and Japan’s Nikkei 225 NIK, +0.47% adding 0.5%.
Equity prices in Europe were little changed with the Stoxx Euro 600 SXXP, -0.12% closing steady at 419.81 as did the U.K.’s FTSE 100 UKX, -0.14% at 7,596.66.