US stocks clinched fresh record highs on Friday, with the Dow coming within a hair’s breadth of 20,000 – which can only have been helped by Goldman Sach’s (NYSE:GS) shares driving 1.5% higher.
As the first week of trading of 2017 showed – even with the absence of Monday for s market holiday – the Dow wasn’t going to stand still. But its latest assault at the 20,000 level came thanks to jobs data which, while far from upbeat, delivered evidence of strong wage growth – and with it prospects of higher interest rates which the banking sector craves.
Alongside 156,00 jobs created in December- below a forecast 178,000 jobs, US average hourly earnings in December rose by 0.4% month-on-month versus a 0.1% decline in November and a forecast for the front month of up 0.3%. It was also the fastest clip in wage growth since the depths of the financial crisis in 2009.
US government payrolls also showed largesse in December, growing by 12,000 staff, above a forecast 7,000.
The S&P 500 market bellwether closed up 0.4% at 2,276, having marked a fresh record high of 2,282.10 intraday. It’s top gainer was Illumina Inc (NASDAQ:ILMN) up 5.2% at $141.49.
The tech-heavy Nasdaq Composite closed up 0.6% at 5,521. Having already closed at a record high on Thursday, any upside on Friday was being greeted as a record high. It’s intraday peak came in at 5,536.52.
The Dow Jones Industrial Average ended up 0.3% at 19,963 – having earlier offered a soccer goal miss opportunity when it peaked at 19,999.63, less than a point off the 20,000 mark it has tried to assault since mid-December when the Fed hiked rates for only the second time in a decade.
The jobs report and wage inflation data reinforced the view that the Federal Reserve will continue tightening rates this year.
As a result, the banking sector which has yearned for rate hikes to improve their industry, saw gains. Among them was Goldman Sachs which ended up 1.5% at $244.90. As the Dow is weighted not by market cap but the rather antiquated alternative of share price, Goldman Sachs’ share gains are currently worth about a quarter of the value of the Dow’s rises.
Goldman’s share price also struck an intraday record high of $246.20.
The rate hike view was given more impetus by Fed speakers on Friday.
The Federal Reserve may have to raise interest rates quicker than markets currently predict should the Trump administration's fiscal stimulus boost the economy, Richmond Fed President Jeffrey Lacker said in prepared remarks on Friday.
Meanwhile, voting member and a rate dove, Chicago Federal Reserve President Charles Evans said on Friday the central bank could raise interest rates three times this year, faster than he had expected just a few months ago and in line with the majority of his colleagues.
Elsewhere it wasn’t so impressive on the bourse. The S&P Midcap 400 closed down 0.08% at 1682 and led by management consultants Fti Consulting (NYSE:FCN), down 5.3% to $42.04 after the stock was downgraded by SunTrust Banks, Inc. from Buy to Hold.
The S&P Smallcap 600 ended down 0.6% at 840 and led by Ruby Tuesday (NYSE:RT) down 25% to $2.65. The global franchise of casual dining restaurants after the bell on Thursday reported disappointing fiscal second quarter 2017 results. Ruby Tuesday reported a second-quarter loss of $38mln with a second quarter loss of $0.63 per share. The company reported second quarter revenues of $214.7mln.
Early trading
US stocks nursed mild losses on Friday after weaker jobs growth data was accompanied by the fastest wage rises since 2009 but the Nasdaq Composite marked a fresh record high.
The US non-farm payrolls came in weaker than expected and the unemployment rate rose to 4.7%, as expected, but wage growth accelerated to the quickest pace since 2009 in December, while the unemployment rate remained at less than half of the Great Recession peak.
This will stoke worries that the Federal Reserve may move to hike rates earlier in 2017 while President Barack Obama passes on a robust labour market to his successor Donald Trump on Jan. 20.
Conversely, Canada reported some outsized employment growth this session.
The number of people in employment rose by 53,700 in December, the country’s stats office said, well above the 10,700 reported in November and far beyond the 2,500 shrinkage expected in a Bloomberg survey of economists.
The market bellwether S&P 500 was down 0.02% at 2268 while the Dow Jones Industrial Average was down 0.07% at 19,886.
Regeneron Pharmaceutical (NASDAQ:REGN) was down 7% at $354.34 and led the S&P 500 decliners after biopharmaceutical firm Amgen (NASDAQ:AMGN) won a US District Court case. The judge ordered its competitors Sanofi (NYSE:SNY) and Regeneron Pharmaceuticals to stop selling a drug that infringes on Amgen patents.
Amgen was one of the top gainers on the S&P 500, up 3.4% to $158.11. Sanofi ADRs were down 2.8%% to $40.36.
Apple Inc (NASDAQ:AAPL) shares were up 0.9% to $117.61 after it was revealed that Apple’s chief executive Tim Cook and other executive leadership took home lower pay packets in 2016, because of missed revenue and profit targets last year.
Based on a regulatory filing on Friday, Apple’s net sales of $215.6bn and operating income of $60bn in 2016 were below the company’s stated goals.
The tech-heavy Nasdaq was up 0.4% at 5,509 having hit an intraday high record of 5,512.11.
Meanwhile, the S&P Midcap 400 was flat at 1683 and the S&P Smallcap 600 lost 0.3% to 842, led by Ruby Tuesday (NYSE:RT) down 21.8% to $2.76. The global franchise of casual dining restaurants after the bell on Thursday reported disappointing fiscal second quarter 2017 results. Ruby Tuesday reported a second-quarter loss of $38mln with a second quarter loss of $0.63 per share. The company reported second quarter revenues of $214.7mln.
Pre-Open
US stocks are set to open softer on Friday after the final non-farm payrolls of 2016 came in weaker-than-expected, but the Nasdaq could rise – pitching a fresh record high.
In December, 156,000 jobs were created in the US, versus a forecast of 178,000 and down from 204,000 in November. As expected, the unemployment rate edged up to 4.7% from 4.6% in November.
Economists had forecast that the world’s biggest economy added 178,000 jobs in December. That's roughly in line with the average 182,200 monthly jobs created during the rest of 2016.
It was also the final jobs report to be released while President Barack Obama was still in office, but already it is being seen as an initial verdict on his successor, President-elect Donald Trump, who assumes office on Jan. 20 and whose pro-business, pro-US jobs rhetoric so far helped buoy Wall Street to almost daily record highs by the S&P 500 and Dow Jones Industrial Average since the poll result was known on Nov. 9.
The S&P 500 market bellwether was seen opening down 0.07% while the Dow was set for 0.1% lower. Markets were soft ahead of the jobs report, which was released at 0830 ET (1330 GMT), but the Nasdaq reversed direction and was pointing to a light gain. If it comes it would be a fresh record high.
On Thursday, the Dow and S&P 500 both edged a bit lower, but the Nasdaq inched up to close at a record 5,488 points.
At least oil prices were firm, if not stellar. The US oil benchmark West Texas Intermediate was up 0.9% at $54.22, buttressing the bourse.
Shares in Toyota (NYSE:TM) slipped by nearly 2% in Tokyo after the company was targeted by a threatening tweet from President-elect Donald Trump. The stock also slipped on Wall Street on Thursday to $120.44.
Trump took aim at the automaker over its plans to open a new factory in Mexico.
Read: Trending: Will Trump’s threats turn idle?
Meanwhile, shares in the biopharmaceutical firm Amgen (NASDAQ:AMGN) are rallying premarket after a US District Court judge ordered its competitors Sanofi (NYSE:SNY) and Regeneron Pharmaceuticals (NASDAQ:REGN) to stop selling a drug that infringes on Amgen patents.
Amgen was helping the Nasdaq climb and was up 4.3% at $159.51 pre-market. But Sanofi ADRs were down 3.3% to $40.15 and Regeneron tumbled by 5.8% to $359.00 pre-market.
Although the jobs data was weaker, it may not derail anything hawkish which two Federal Reserve officials speaking later in the day might say.
Chicago’s Charles Evans will speak at 1115 ET (1615 GMT) while Richmond Fed’s Jeffrey Lacker will speak at 1300 ET (1800 GMT). The non-farm payrolls are seen as an important leading indicator for the timing of any future US rate hikes. The last hike – and only the second in a decade – came in mid-December.