The Dow(INDU) rose as much as 44 points, or 0.2%, to cross 29,000 points, but shortly after, it fell back below the key level. The index fell just short of that mark at Thursday's close, but still finished at a record high.
President Donald Trump tweeted that the Dow had risen 11,000 points since his election, adding "the best is yet to come."
Between election day 2016 and Friday's trading high, stocks gained 10,676 points.
The S&P 500(SPX), a broader measure of the stock market, was up 0.1%. The Nasdaq Composite(COMP) climbed 0.2%. Both indexes also hit new all-time closing highs Thursday.
It's been a choppy start to the year for stocks: Fears over a military conflict between the United States and Iran weighed on markets over the past several days. Meanwhile, hopes for calmer conditions on the trade front ahead of next week's signing of the "phase one" trade deal between America and China helped boost stocks.
The U.S. jobs market ended 2019 on a sour note, with December's payroll and wage growth missing expectations, according to Labor Department figures released Friday.
Nonfarm payrolls increased by just 145,000 while the unemployment rate held steady at 3.5%. Economists surveyed by Dow Jones had been looking for job growth of 160,000. The jobless rate met expectations for staying at a 50-year low.
In addition to the slow payroll growth, average hourly earnings rose by just 2.9%, below the 3.1% projection. December marked the first time that wage gains were below 3% on a year-over-year basis since July 2018.
Revisions to the October and November counts brought those two months down by 14,000 as well. The glittering 266,000 initial estimate for November came down 10,000 while October's fell from 156,000 to 152,000.
Dow futures turned negative following the disappointing report.
Lowest since 1994
On the upside, a separate, more encompassing measure that includes discouraged and underemployed workers fell to 6.7%, the lowest it's ever been in records going back to 1994. The decline came amid a drop of 140,000 in people working part-time for economic reasons.
The labor force participation rate held steady at 63.2% as the workforce rose by 209,000 to 164.6 million and those considered no longer in the job pool fell by 48,000 to 95.6 million.
The total employment level rose to 158.8 million, also a fresh high. However, the unemployment rate for African Americans rose 0.3 percentage points to 5.9%.
For the year, payrolls increased by 2.1 million, an average of 176,000 a month, the slowest year for job creation since 2011 — three years after the start of the financial crisis — and down considerably from the 2.7 million positions added in 2018.
The numbers follow a year of anxiety about a potential recession on the horizon. While fears of an outright downturn have largely been eradicated, recent surveys among corporate executives show a high level of unease about slowing growth.
Manufacturing job declines
Job gains in December came primarily from retail (41,000), leisure and hospitality (40,000) and health care (28,000).
Construction rose by 20,000 and professional and business services saw an increase of 10,000, while manufacturing declined by 12,000, transportation and warehousing lost 10,000 and mining fell by 8,000.
It was a difficult year for manufacturing jobs: The sector saw a net gain of just 46,000 compared with a 264,000 gain the year before. The U.S. and China spent the year locked in a trade battle that saw billions of dollars in tariffs exchanged between the two sides.
The average work week, considered a good indicator for employers' future intentions, held steady at 34.3 hours.
The Labor Department also released its annual revisions to its household survey data, but there were no changes to monthly unemployment rates throughout the year.
Correction: This report was corrected to show that the October job gains fell to 152,000, making the total revisions for October and November down by 14,000.
Friday’s trading is likely to be driven by the release of the Labor Department’s jobs report, so more on that in a second.
A bit longer term is this call of the day from Shep Perkins, chief investment officer for equities at Putnam Investments. He argues the S&P 500
SPX, +0.67%
could reach 5,000 quicker than you might imagine, given that it only reached 3,000 in July (and closed Thursday at a record 3,274.70).
In the Boston fund manager’s first-quarter outlook, Perkins says price-to-earnings multiples are in line with their average in recent decades, and there is a reasonable case that multiples will expand, fueled by historically low long-term bond yields.
For much of the second half of 2019, the dividend yield on the S&P 500 was higher than the 10-year U.S. Treasury yield
TMUBMUSD10Y, -1.51%
—compared with bonds, stocks have almost never been cheaper.
Technology giants including Facebook
FB, +1.43%,
Google owner Alphabet
GOOG, +1.10%,
Cisco Systems
CSCO, -0.42%,
Intel
INTC, +0.56%
and Apple
AAPL, +2.12%
have “undemanding valuations,” says Perkins, while sectors including financials, energy and basic materials, which account for a fifth of the S&P 500, are priced well below historical average.
And what if earnings accelerate, say driven by a pickup of global growth and a weakening dollar? “With earnings growth of 8.5% per year and a 26x P/E multiple, the market would surpass that mark inside of three years. This is hardly the base case, but it’s also not an extreme scenario in the event bond yields remain depressed,” Perkins says.
Even if a recession hits, the S&P 500 could reach 5,000 in five years, particularly if that downturn came this year or next, he adds.
The buzz
The number of new jobs created in December may have tapered off to about 160,000 from a surprisingly large 266,000 gain in the prior month, according to economists polled by MarketWatch. The unemployment rate is seen as staying at 3.5%, a 50-year low. The data report is due at 8:30 a.m. Eastern.
Tom Porcelli of RBC Capital Markets, who is forecasting 150,000 jobs created, says the labor market is heading toward a lower break-even point, that is, the level at which jobs are created to absorb the growth in the labor force. The number of prime-working-age people not in the labor force is now down to prerecession levels, suggesting that future employment growth may become more closely aligned with population growth, which would take the break-even level down to around 100,000 a month.
As wages are rising, “we need to get used to lower rates of job growth, but that’s not necessarily a bad thing,” Porcelli says.
On the corporate front, new internal emails paint a disturbing picture of the deadly Boeing
BA, +1.50%
737 Max aircraft, with one insider saying the plane was “designed by clowns who in turn are supervised by monkeys,” the latter referring to the Federal Aviation Administration. Boeing shares advanced on Thursday on indications the 737 that crashed in Tehran may have been accidentally shot down.
A spokesperson for delivery service Grubhub
GRUB, +1.79%
told the New York Post there are no plans to sell the company, following a report it was reviewing its strategic options.
Eli Lilly
LLY, +1.65%
announced it was buying skin-focused biopharma Dermira
DERM, +4.47%
in a $1.1 billion deal.
The markets
After the 211-point surge in the Dow industrials
DJIA, +0.74%
on Thursday, U.S. stock futures
ES00, +0.16%
leaned higher. European stocks
SXXP, +0.06%
were on track to reach a record.
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1. Dow set to trade above 29,000 for first time at open
Traders and financial professionals work on the floor of the New York Stock Exchange at the closing bell on October 30, 2019 in New York City.
Drew Angerer | Getty Images
U.S. stock futures, ahead of the release of the government's monthly employment report, were higher on Friday after record closes for the Dow Jones Industrial Average, S&P 500 and Nasdaq. The Dow is being indicated to trade above 29,000 for the first time ever at Wall Street's open. That could, of course, change after the December jobs report comes out at 8:30 a.m. ET. But as of Thursday's close, the Dow and S&P 500 were tracking for over 1% gains for the week, and the Nasdaq was riding a weekly increase of 2%.
2. December's jobs report could have some surprises in it
Flextronics International Apple factory employees work on Apple Mac Pro computer assembly in Austin, TX, November 20, 2019.
Tom Brenner | Reuters
Economists expect December's employment report to show a solid pace of job growth and steady wage gains. Nonfarm payrolls are expected to have increased by 160,000 last month, with steady 3.1% year-over-year wage growth. The unemployment rate is expected to remain unchanged at 3.5%, matching half-century lows. However, economists say both the headline payroll number and wage growth could be above forecasts because the economy has been a bit stronger than expected recently.
3. 'Designed by clowns who in turn are supervised by monkeys'
Boeing 737 MAX airplanes are parked at Grant County International Airport October 23, 2019 in Moses Lake, Washington. Boeing reported that its profits were down by more than half in the latest quarter.
David Ryder | Getty Images
Shares of Dow stock Boeing were under some pressure in Friday's premarket trading after the embattled aircraft giant released a trove of internal communications that showed employees boasting about bullying regulators to approve the now-grounded 737 Max without requiring pilots to undergo simulator training. In messages from April 2017, one Boeing employee told another: "This airplane is designed by clowns who in turn are supervised by monkeys."
4. House passes resolution to limit Trump's war powers
President Donald Trump announces proposed rollbacks to the National Environmental Policy Act regulations during an event in Roosevelt Room of the White House in Washington, January 9, 2020.
Kevin Lamarque | Reuters
The House passed a resolution to curb President Donald Trump's war powers against Iran, which retaliated this week for the U.S. killing last week of a top Iranian general. The Democratic-held House approved the nonbinding measure by a 224-194 vote, mostly along party lines. However, three Republicans and an independent did vote for it, while eight Democrats did vote against it. While nearly all Republicans have expressed support for taking out Iranian Gen. Qasem Soleimani, a few GOP lawmakers criticized the Trump administration after being briefed on the operation.
5. Pelosi: I won't rush to send impeachment articles
Speaker of the House Nancy Pelosi, D-Calif., meets with reporters following escalation of tensions this week between the U.S. and Iran, Thursday, Jan. 9, 2020, on Capitol Hill in Washington.
J. Scott Applewhite | AP
House Speaker Nancy Pelosi is saying she will not rush to deliver two articles of impeachment against the president to the Senate. The decision to delay sending the articles is part of a strategy aimed at forcing concessions out of Senate Majority Leader Mitch McConnell on rules for the trial. Trump said he would support witnesses testifying in his upcoming Senate impeachment trial, as long as it meant his legal team could summon House Intelligence Committee Chairman Adam Schiff, former Vice President Joe Biden and his son Hunter Biden, and the anonymous whistleblower whose 2019 complaint sparked the impeachment probe in the first place.
Elon Musk has yet again provoked intrigue among the Bitcoin and cryptocurrency community. The tech entrepreneur posted a cryptic tweet referencing the digital asset earlier today.
The Tesla and SpaceX CEO wrote on Friday ‘Bitcoin is *not* my safe word.’ Safe word, for those unaware, is a phrase commonly associated with sexual activity.
The suggestive wording of the tweet has left followers and the Bitcoin industry guessing as to what prompted Musk to suddenly start talking Bitcoin again.
The technology entrepreneur has previously referenced Bitcoin and other cryptocurrencies via Twitter and elsewhere. BeInCrypto previously reported on another of Musk’s cryptic tweets. At the end of last April, he simply posted the word ‘Ethereum.’ This earned him an invite to the Ethereum Devcon event in October from Vitalik Buterin himself — however, Musk didn’t end up attending.
Similarly, in an interview with Tasha Keeney of ARK Invest early last year, Musk confirmed that he owns 0.25 BTC. He also said he finds the cryptocurrency’s design “quite brilliant,” before commenting that some other digital assets might have “some merit.”
Today’s intriguing tweet has garnered a lot of attention, relative to other big posts about the cryptocurrency. At the time of writing it has been retweeted more than 43,000 times and liked by more than 48,700 users.
Just like the previous occasions, Friday’s cryptocurrency-related tweet has excited many industry participants. Podcaster Peter McCormack invited Musk to appear on his “What Bitcoin Did” show. Meanwhile, Ethereum developer Anthony Sassano (@sassal0x) attempted to pry further into the entrepreneur’s opinion on Ethereum. Others used the opportunity to shill their favorite cryptocurrencies to the entrepreneur with a few users arguing that Bitcoin SV will see greater adoption than Bitcoin (BTC).
Musk’s cryptic cryptocurrency testimonials have perhaps over-excited industry participants on previous occasions too. As BeInCrypto reported late last year, a tweet reading just “200k” was interpreted by some as a wildly bullish Bitcoin price prediction. However, it turned out that the figure simply the number of the newly-revealed Tesla Cybertrucks that have been preordered.
Images courtesy of Shutterstock, Trading View and Twitter.
Now, the bitcoin and cryptocurrency community have been left scratching their heads after Musk tweeted "bitcoin is not my safe word," early on Friday morning.
Elon Musk made his fortune from payments company PayPal before setting up Tesla and SpaceX. Musk has ... [+] previously used micro-blogging platform Twitter to praise bitcoin and other major cryptocurrencies.
The bitcoin price has struggled since hitting highs of around $14,000 in early July last year.
Coinbase
Meanwhile, shares in Tesla have soared this week, with its market value now topping the combined value of U.S. rivals Ford and General Motors and landing it the title of the highest-valued automaker of all time.
The sharp rise in Tesla valuation, which has doubled since October, comes after it revealed a surprise third-quarter profit and delivered a record 367,500 cars in 2019.
This trend isn't new. It has been going on for several years (remember Sears?). But the 2019 holiday shopping season brought their troubles into stark relief.
Despite low unemployment and high consumer confidence, JCPenney(JCP) had a dismal holiday. Kohl's(KSS) and Macy's(M) suffered, too. And Victoria's Secret parent L Brands(LB) continued its years-long run of losses.
JCPenney's sales at stores and websites open for a year fell 7.5% during the holidays compared with last year. Kohl's and Macy's sales dropped slightly, and Macy's said it will close 28 stores. Victoria's Secret sales at stores and websites open for at least a year fell 12% and its parent cut its earnings forecast.
JCPenney's results raise "continued questions about the chain's long-term viability," Neil Saunders, analyst at GlobalData Retail, said in a note to clients Thursday. "Once loyal customers now avoid the chain and shop elsewhere."
Americans are still shopping, and consumer spending in the United States remains strong. But shoppers they are hunting for bargains at big box chains such as Walmart(WMT), Target(TGT), Costco(COST) and online. Costco said Wednesday that sales in the United States during December jumped 9.4%. These companies are taking market share from department stores, according to analysts.
There is no shortage of competitors to blame for department stores' woes. The big box chains have been able to use their scale to muscle down prices on everything from televisions to clothing. Discount retailers, including TJMaxx and fast-fashion chains, continue to grow sales.
That has suqeezed department stores, forcing them to lower prices on clothes or put them on sale, which has pressured profits.
Macy's, JCPenney and Victoria's Secret are also located in older malls, while Target and TJMaxx's stores are typically standalone, independent of malls. This is a major advantage to draw in customers, according to analysts.
But department store leaders have also their own strategies to blame. Department stores are making changes to stores to boost the customer experience. But they are taking incremental steps, rather than implementing sweeping overhauls.
At Kohl's, the "single biggest initiative" of 2019, according to CEO Michelle Gass, was a partnership with Amazon to accept returns for free. Kohl's hoped that the partnership would draw customer traffic, but some analysts are starting to question whether Amazon has delivered.
"We continue to be surprised that Kohl's isn't seeing much in the way of a traffic bump from its partnership with Amazon," Chuck Grom, analyst at Gordon Haskett Research Advisors, said in a note to clients Thursday.
