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Dow Jones Industrial Average Fell as 29K Is a Ceiling for Now - Barron's

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The Dow Jones Industrial Average ended Friday with a loss after topping 29,000 for the first time during the session. Illustration by Michael George Haddad

Fall on Jobs. All three major indexes closed in the red on Friday, following a softer-than-expected jobs report for December. Still, the Dow Jones Industrial Average briefly topped 29,000 for the first time before slipping. House Speaker Nancy Pelosi said she’ll transmit the articles of impeachment against President Donald Trump to the Senate next week. The U.S. and China are expected to sign an interim trade deal next week as well.

Dow component Boeing stock (BA) fell 1.9% after the company released internal communications showing employees scoffing at safety issues and ridiculing officials. The company is also set to examine the black box from the Ukrainian jetliner that crashed near Tehran shortly after taking off. Iran has blamed the crash on technical issues. In today’s After the Bell, we...

  • check on the U.S. job market in December as well as the full 2019;
  • update on the jet crash in Iran, and the latest U.S. economic sanctions;
  • and eye upcoming bank earnings due next week.

Small Setback

U.S. stocks closed lower on Friday despite early gains. The Dow Jones Industrial Average lost 133.13 points, or 0.46%, to close at 28,823.77. The S&P 500 slipped 9.35 points, or 0.29%, to end at 3265.35, and the Nasdaq Composite dropped 24.57 points, or 0.27%, to close at 9178.86.

The U.S. economy added 145,000 jobs in the final month of 2019, finishing the ninth straight year in which new hires topped the 2 million mark. Still, the December number fell short of the economists forecast, after a surprisingly robust 256,000 gain in November. The total job creation for the full year at 2.1 million was also sharply lower than the 2.7 million added in 2018. Hiring activities have been slowing partly due to the uncertainty brought on by U.S.-China trade tension, but the tight labor market has also made it harder for companies to find qualified workers and fill openings.

The unemployment rate remained at a 50-year low of 3.5% in December, but American workers haven’t seen their paychecks getting fatter as they usually did in the past. Average hourly pay inched up in December to $28.32 from $28.29 in November; December’s year-over-year wage growth was 2.9%, down from 3.1% in November. Companies might be resorting to other methods to attract or retain workers in lieu of better pay.

On other news, Iran invited investigators from the U.S., Ukraine, France, Canada as well as aircraft manufacturer Boeing to probe the causes of a plane crash near Tehran earlier this week. The Iranian government denied the claims from western countries that the Boeing 737 was shot down by Iranian missiles and said it’s willing to share the plane’s black-box data with other investigators.

Still, U.S. officials announced today a new round of sanctions against the country, as previewed by President Trump in his Wednesday speech. The Treasury Department will take actions against eight senior Iranian officials deemed to have been involved in Tuesday’s missile strikes on military bases in Iraq housing U.S. troops, as well as Iran’s largest steel, aluminum, copper, and iron manufacturers, which collectively generate billions of dollars annually.

Looking to next week, U.S. banks will be kicking off the fourth-quarter earnings season, with Citigroup (C), JPMorgan Chase (JPM), and Wells Fargo (WFC) set to report on Tuesday. Bank of America (BAC) and Goldman Sachs Group (GS) will report on Wednesday, and Friday will see Morgan Stanley (MS) report. Bank margins will be closely watched as the Federal Reserve’s three rate reductions in 2019 cut into banks’ profitability on loans.

Write to Evie Liu at evie.liu@barrons.com


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