Dow hits 29,000 before succumbing to profit taking
10-Jan-20 16:15 ET
Dow -133.13 at 28823.68, Nasdaq -24.57 at 9178.88, S&P -9.35 at 3265.35
briefing.com
[BRIEFING.COM] The stock market hit new highs on Friday but succumbed to profit taking late in the session, as the December employment report failed to generate much excitement. The Dow Jones Industrial Average (-0.5%) hit 29,000 for the first time early in the session before finishing slightly lower with the S&P 500 (-0.3%), Nasdaq Composite (-0.5%), and Russell 2000 (-0.4%).
Briefly, nonfarm payrolls grew by 145,000 (Briefing.com consensus 160,000), average hourly earnings increased just 0.1% (Briefing.com consensus +0.3%), and the average workweek was reported at 34.3 hours (Briefing.com consensus 34.4). Overall it wasn't a bad report, but the softer-than-expected numbers likely tempered growth expectations for the fourth quarter.
In turn, the momentum that carried the market to record highs gradually transitioned to overdue selling, as cyclical sectors led the decline and selling picked up into the close. The S&P 500 financials (-0.8%), industrials (-0.7%), energy (-0.6%), and consumer discretionary (-0.5%) sectors were today's laggards.
The defensive-oriented real estate (+1.0%), utilities (+0.2%), and health care (+0.04%) sector finished higher.
Boeing (BA 329.92, -6.42, -1.9%) shares were pressured after disparaging employee memos about the 737 MAX situation were released. On a related, Boeing supplier Spirit Aerosystems (SPR 69.70, -3.09, -4.3%) said it will eliminate 2,800 jobs.
Six Flags (SIX 35.96, -7.80, -17.8%), KB Home (KBH 35.86, -1.20, -3.2%), and GrubHub (GRUB 52.38, -3.35, -6.0%) were other negative story stocks after providing disappointing updates. Six Flags issued downside Q4 guidance, KB Home missed revenue estimates, and GrubHub denied reports that it was seeking a sale.
In M&A activity, Dermira (DERM 19.16, +0.82, +4.5%) agreed to be acquired by Eli Lilly (LLY 138.00, +2.08, +1.5%) for $18.75 per share or $1.1 billion in cash.
U.S. Treasuries ended the session on a higher note as part of a defensive-oriented trade. The 2-yr yield declined one basis point to 1.56%, and the 10-yr yield declined three basis points to 1.83%. The U.S. Dollar Index declined 0.1% to 97.36. WTI crude fell 0.9%, or $0.55, to $58.99/bbl.
Reviewing Friday's economic data, which featured the Employment Situation Report for December:
- December nonfarm payrolls increased by 145,000 (Briefing.com consensus 160,000), private sector payrolls increased by 139,000 (Briefing.com consensus 157,000), the unemployment rate was 3.5% (Briefing.com consensus 3.5%), and average hourly earnings were up 0.1% (Briefing.com consensus +0.3%).
- The key takeaway from the report, which included updates to the seasonal adjustment factors for the labor force series derived from the household survey, was that average hourly earnings and the average workweek were both weaker than expected. That may temper any inflation concerns, but at the same time it is apt to temper consumer spending activity and overall GDP growth expectations for the fourth quarter.
- Wholesale inventories decreased 0.1% m/m in November (Briefing.com consensus +0.2%) after increasing 0.1% in October. Wholesale sales surged 1.5% after declining 0.9% in October.
- The key takeaway from the report is that sales activity was strong in November, but it will still prove difficult for wholesalers to gain pricing power given that inventory growth remains well ahead of sales growth on a yr/yr basis.
Investors will not receive any notable economic data on Monday.
- Nasdaq Composite +2.3% YTD
- S&P 500 +1.1% YTD
- Dow Jones Industrial Average +1.0% YTD
- Russell 2000 -0.7% YTD
Market Snapshot
| Dow | 28823.68 | -133.13 | (-0.46%) | | Nasdaq | 9178.88 | -24.57 | (-0.27%) | | SP 500 | 3265.35 | -9.35 | (-0.29%) | | 10-yr Note | +4/32 | 1.819 |
|
| | NYSE | Adv 1351 | Dec 1517 | Vol 778.6 mln | | Nasdaq | Adv 1407 | Dec 1771 | Vol 2.5 bln |
Industry Watch
| Strong: Real Estate, Utilities, Health Care |
| | Weak: Financials, Industrials, Energy |
Moving the Market
-- Stock market closes lower in profit-taking trade
-- Softer-than-expected December employment report
-- Relative strength in the defensive-oriented sectors; weakness in the cyclical sectors
|
WTI crude extends losses
10-Jan-20 15:25 ET
Dow -104.58 at 28852.23, Nasdaq -21.05 at 9182.40, S&P -6.98 at 3267.72
[BRIEFING.COM] The S&P 500 is down 0.3% but is still on pace to end the week in positive territory. It's up 1.0% for the week.
One last look at the S&P 500 sectors continues to show a defensive tilt, with the real estate (+0.9%), utilities (+0.3%), and health care (+0.1%) sectors up in the green. The cyclical financials (-0.8%), industrials (-0.6%), and energy (-0.5%) sectors underperform.
WTI crude futures settled down $0.55 (-0.9%) to $58.99/bbl. |
