Stocks close at new highs after Dow nearly hits 20,000
Stocks rose to all-time highs Friday as the technology sector led, while investors parsed key employment data.
The Dow ended 65 points higher, with Goldman Sachs and Walt Disney contributing the most gains. The index came within 0.37 points of hitting 20,000 for the first time. The S&P 500 gained 0.35 percent and hit a new all-time high, with information technology advancing 1 percent.
The Nasdaq outperformed, closing 0.6 percent higher, also a new all-time high. Leading the tech-heavy index higher were Apple and the so-called FANG stocks — Facebook, Amazon, Netflix and Google-parent Alphabet — which all rose.
“I think that part of the catalyst is this rotation into some of the sectors that had not caught the initial updrift” from the U.S. presidential election, said Daniel Deming, managing director at KKM Financial. “When you look at the tech sector, it was not viewed favorably” by investors right after Nov. 8.
“The Dow has been approaching 20,000 for several weeks now. Strong jobs news, combined with optimism about the incoming administration’s policies is lifting stocks,” said Kate Warne, investment strategist at Edward Jones. The U.S. economy added 156,000 jobs in December, according to data from the Bureau of Labor Statistics. Economists polled by Reuters expected an increase of 178,000. The unemployment rate came in at 4.7 percent, in line with expectations.
“This report is very good,” said Michael Arone, chief investment strategist at State Street Global Advisors. “The fantastic thing here is the jump in hourly wages.” Average hourly wages rose 10 cents to $26, representing a 2.9 percent annualized gain.
Art Hogan, chief market strategist at Wunderlich Securities, said the report was “a net positive.” “I think the problem is that investors are coming to the realization that the stronger dollar could be a headwind … for about 60 percent of the S&P 500.”
The U.S. dollar rose 0.7 percent against six other currencies, a day after falling sharply. The euro dropped 0.6 percent against the greenback to $1.053 and the yen slid around 1.3 percent to 116.9.
Other data released Friday included November factory orders, which fell 2.4 percent, more than expected.
Treasury prices, erased slight gains following the employment data release, with the 10-year note yield rising to 2.418 percent and the two-year note yield climbing to 1.218 percent.
“Treasuries sold off after the number because I think they are honing in on the better private sector upward revision to October and November which offset the December miss,” said Peter Boockvar, chief market analyst at The Lindsey Group, in a note.
Stocks and Treasury yields have skyrocketed since President-elect Donald Trump’s victory amid the prospects of looser regulations in certain sectors, lower tax rates and fiscal stimulus. Since then, major economic data have taken a backseat to transition-related news and investors assessing whether Trump’s proposed policies will take effect.
“One of the ways we’ve been describing 2017 is ‘the new abnormal,'” said State Street’s Arone, noting that investors are now paying more attention to fiscal policy rather than monetary policy.
The Dow and S&P have risen more than 8 percent and 6 percent since Nov. 8, respectively. That said, the indexes entered the new year having posted a three-day losing streak to end 2016.
“The incoming president usually enjoys a ‘market honeymoon.’ I think President-elect Trump might have gotten his before even taking office,” said JJ Kinahan, chief market strategist at TD Ameritrade.
Advancers and decliners were about even at the New York Stock Exchange, with an exchange volume of 404 million and a composite volume of 2.174 billion in afternoon trade.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 11.4.