Solid job reports pushes indices higher
Modest gains on Wall Street pushed the S&P 500 and Nasdaq Composite to record levels on Friday, 06 January 2017, while the Dow closed a fraction below the closely watched 20,000 level, following a December U.S. jobs report that investors interpreted as generally positive. All three benchmarks posted solid weekly gains, continuing the post election rally on Wall Street.
Equity indices started the day flat after the December Employment Situation report was met with a muted reaction from investors. The stock market picked up the pace about an hour into the session, trending upwards to a record intraday high where it remained until the closing bell.
The Dow Jones Industrial Average gained 64.51 points, or 0.3%, to 19,963.80, after coming within a whisker to the psychologically important 20,000 level. At session highs, the Dow hit 19,999.63, setting an intraday record. The blue-chip index rose 1% over the week. The Nasdaq Composite was the day's best performer among stock-market indexes, advancing 33.12 points, or 0.6%, to 5,521.06. The tech-heavy index gained 2.6% over the week. The S&P 500 closed 7.98 points, or 0.4%, higher at 2,276.
Eight of the 11 main sectors finished with gains, led by technology and financials shares. The telecoms sector was the biggest laggard.
The Labor Department reported on Friday that 156,000 jobs were added in December to cap off the sixth straight year in which the economy created more than 2 million new jobs. Market had predicted a 180,000 increase in new nonfarm jobs. The unemployment rate rose to 4.7% from 4.6%. An increase in wage growth, however, provided support for the argument that the employment market remains on a solid footing. Average hourly wages jumped 0.4% to $26 last month, while hourly pay increased 2.9% from December 2015 to December 2016, marking the fastest 12-month increase since a recovery that began in mid-2009.
Strength in the dollar, with the ICE U.S. Dollar Index, a measure of the currency against six rival currencies, tacking on 0.7% Friday, weighed on crude, which is priced in the currency. A stronger buck makes assets priced in the currency more expensive to buyers using other monetary units.
The main indexes maintained gains after news reports that multiple people have been shot and killed Friday at the Fort Lauderdale-Hollywood International Airport.
As per traders, the jobs report was solid and pointed to continued growth in the economy. More importantly, wage growthoften seen as a precursor to inflationpicked up to mark the fastest annual increase since a recovery that began in mid-2009.
In other economic news, the U.S. trade deficit rose almost 7% in November as imports hit the highest level in nearly a year and a half, largely because of a gush of foreign oil.
Bullion prices settled lower on Friday, 06 January 2016 at Comex. Gold futures settled lower on Friday as strength in the U.S. dollar and equities in the wake of the monthly domestic jobs report dulled investment demand for the precious metal. Prices, however, gained for the week, buoyed by uncertainty surrounding the pace of interest-rate increases by the Federal Reserve.
February gold fell $7.90, or 0.7%, to settle at $1,173.40 an ounce, after notching its highest settlement in five weeks on Thursday. Expectations about the pace of rate increasesa negative for gold that doesn't offer a yieldhas cooled somewhat. For the week, the yellow metal tallied a 1.8% gain. March silver was off 11.8 cents, or 0.7%, at $16.519 an ounce, paring its weekly rise to roughly 3.3%.
Crude oil futures finished modestly higher on Friday, 06 January 2017 with prices extending their streak of gains to a fourth straight week amid ongoing signs of compliance with a global pact to cut production. Traders have shown concern that the recent price gains for oil, which climbed nearly 9% in December, will spur increases among producers who aren't part of the initiative, including the U.S. and Libya. That kept price gains for oil in check.
February West Texas Intermediate crude rose 23 cents, or 0.4%, to settle at $53.99 a barrel on the New York Mercantile Exchange, after trading as low as $53.32. It was roughly 0.5% higher for the week after posting gains in each of the previous three weeks. The March contract for Brent crude edged up by 21 cents, or 0.4%, to finish at $57.10 a barrel on the ICE Futures exchange in London, for weekly gain of about 0.5%.
The Treasury market saw stepped-up selling pressure after the 8:30 ET release of the Employment Situation report for December, but cooled off afterwards. The 10-yr yield closed the day seven basis points higher at 2.42%.
Monday's economic data will be limited to the November Consumer Credit report, which will be released at 3:00 pm ET.
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