Dow Jones Industrial Average Crosses 29000 for First Time

Date : 10/01/2020 @ 16:31
Source : Dow Jones News

Dow Jones Industrial Average Crosses 29000 for First Time

By Gunjan Banerji and Anna Isaac 

The Dow Jones Industrial Average jumped past the 29000 milestone for the first time Friday after fresh jobs data showed that unemployment hovered at a 50-year low in December.

The blue-chip index crossed that level in morning trading before paring some of its gains. It recently traded up 3 points, or less than 0.1%, at 28960, after earlier rising as high as 29009.

The S&P 500 climbed 0.2%. The Nasdaq Composite added 0.3%. All three indexes were on track for fresh records.

Ebbing recession fears and calming geopolitical tensions have driven the Dow's climb toward 29000. The blue-chip gauge has zipped to the new mark from 28000 in just 37 sessions. That's the shortest time to reach a new 1000-point milestone since January 2018 when it took eight sessions to climb to 26000 from 25000, according to Dow Jones Market Data.

Apple has been the biggest point contributor to the index since it first closed above 28000; Boeing has been the biggest laggard..

The advance comes after a blockbuster year for U.S. stocks in which major indexes clinched record after record as the Federal Reserve trimmed interest rates three times.

Now, some investors and analysts say they expect those rate cuts and a strong U.S. consumer to help lift corporate profits and propel the stock market even higher in coming months.

"The stock market has a lot of momentum going for it," said Liz Ann Sonders, chief investment strategist at Charles Schwab.

Investors were closely assessing the U.S. Labor Department's December jobs report for any signs of a slowing economy. The figures didn't stoke concerns about the economy overheating or heading toward an imminent recession, analysts said. Low wages alongside robust hiring have buoyed markets in recent years, and the latest data indicated that scenario persists.

Although the pace of hiring slowed last year, employers added 145,000 jobs in December, capping a 10th straight year of payroll gains.

However, private-sector wages advanced 2.9% in December from a year earlier, the smallest annual gain since July 2018. The pace of hiring slowed last year, reflecting global economic uncertainty, fading effects of 2018's tax cuts and employers' difficulty in finding enough workers.

Government bond yields dropped on the report. The yield on the 10-year Treasury note fell to 1.834% in early trading, from 1.857% on Thursday, before paring declined. Yields fall as bond prices rise. Gold prices also inched higher.

Still, the continued job creation in 2019 -- on the heels of payroll gains every year since 2010 -- would help bolster the Federal Reserve's view that monetary policy doesn't need to be eased further as the U.S. economy is continuing to grow. Some analysts said the latest figures didn't alter the outlook on monetary policy.

"I just don't think it's a needle-mover either way," said Ms. Sonders.

On Thursday, two senior Fed officials said they saw no need to change short-term interest rates soon, and that they were upbeat about the economic outlook.

"The employment rate is still below what it was before the financial crisis," said Florian Hense, an economist at Berenberg Bank. "What would make them raise rates is wage inflation close to 4%, and we're pretty far from that."

Still, some analysts said that some of the geopolitical tensions that rattled markets in recent days could return later this year. President Trump moved to de-escalate hostilities with Iran earlier in the week, signaling no new U.S. military strikes. However, there is a chance that tensions between the two countries mount later in the year. For example, news that a U.S. airstrike in Baghdad killed an Iranian military leader last week put a brake on a winning stretch for stocks. They later rebounded.

"It's much harder to predict how that's going to evolve," said Tracie McMillion, head of global asset allocation at Wells Fargo Investment Institute. "It's very possible we could see additional escalation throughout the year."

Write to Gunjan Banerji at Gunjan.Banerji@wsj.com and Anna Isaac at anna.isaac@wsj.com

 

(END) Dow Jones Newswires

January 10, 2020 11:16 ET (16:16 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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