U.S. stock markets closed lower on Friday following weak non-farm payroll data for the month of December 2019. Moreover, ongoing geopolitical conflict between the United States and Iran resulted in drop in crude oil prices. All the major stock indexes finished in negative territory. However, Wall Street ended in the green in the first full trading week of this year.
The Dow Jones Industrial Average (DJI) lost 0.5% or 133.13 points to close at 28,823.77. The S&P 500 declined 0.3% to close at 3,265.35. Meanwhile, the Nasdaq Composite Index closed at 9,178.86, shedding 0.3%. The fear-gauge CBOE Volatility Index (VIX) increased 0.2% to close at 12.56. A total of 6.77 billion shares were traded Friday, lower than the last 20-session average of 7 billion. Decliners outnumbered advancers on the NYSE 1.09-to-1 ratio. On Nasdaq, a 1.31-to-1 ratio favored declining issues.
How Did The Benchmarks Perform?
The Dow closed in negative territory with 22 components of the 30-stock blue-chip index closing in the red while 8 ended in green. The tech-laden Nasdaq Composite also ended in the negative territory due to weak performance of tech stocks. The S&P 500 finished in the red. Both the Financials Select Sector SPDR (XLF) and the Industrials Select Sector SPDR (XLI) lost 0.7%. However, the Real Estate Select Sector SPDR (XLRE) gained 1%. Notably, nine out of 11 sectors of the benchmark index closed in the red while two finished in the green.
Weak Job Data for December 2019
The Department of Labor reported that the U.S. economy added 145,000 non-farm jobs in December 2019, lagging the consensus estimate of 163,000. Moreover, November’s job addition also revised downward to 256,000 from 266,000 reported earlier. In December, the sectors that added most of the jobs include retail (41,000), leisure and hospitality (40,000) and health care (28,000).
For full year 2019, total job creation was 2.1 million or an average of 176,000 per month. This was the lowest yearly job creation since 2011 although 2019 marked the ninth straight year of over 2 million job addition. However, unemployment held steady at 3.5%, lowest level in more than 50 years.
The workforce participation rate rose by 209,000 to 164.6 million in December and total employment level rose to a fresh level of 158.8 million.
Average hourly wage rate grew by 0.1% missing with consensus estimate of 0.3%. Average hourly growth rate in November was revised upward to 0.3% from 0.2% reported earlier. In December, wage rate grew 2.9% year over year, marking its first monthly gain of below 3% year over year since July 2018. The average work week, a reliable gauge for employers’ future intentions, remained same at 34.3 hours.
U.S. Slaps More Sanctions on Iran
The United States imposed more restrictive measures on Iran following recent escalation of geopolitical tussles between the two countries. The sanctions primarily target Iran’s metals industry in addition to the country’s construction, manufacturing, mining and textile sectors. Moreover, eight senior Iranian officials are targeted.U.S. Treasury Secretary Steven Mnuchin and Secretary of State Mike Pompeo jointly announced the new sanctions.
Following these developments, crude oil prices witnessed largest weekly price decline in more than five months. On Jan 10, the U.S. benchmark West Texas Intermediate (WTI) crude for February delivery dropped 0.9%, to settle at $59.04 a barrelon the New York Mercantile Exchange. The global benchmark Brent crude for March delivery dropped 0.6%, to settle at $64.98 a barrel on ICE Futures Europe. Shares of major crude oil producers like Exxon Mobil Corp. (XOM - Free Report) and Chevron Corp. (CVX - Free Report) tumbled 0.9%. Both these stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Wall Street finished the first full trading week on a positive note. All three major stock indexes – the Dow, the S&P 500 and the Nasdaq Composite – rallied 0.7%, 0.9% and 1.8%, respectively. Investors’ sentiment remained robust regarding the possibility of the signing of phase-one trade deal between the United States and China on Jan 15. However, weak job data for December 2019 dampened market confidence to some extent.
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