On Friday, the Dow Jones Industrial Average came to within 0.37 of a point of hitting the long-anticipated 20,000 mark, before falling back. However, the senior index still closed at a new high with a gain of 0.3%. The higher close occurred despite a decline of 0.3% immediately following the opening bell, a mid-day rally and a round of profit-taking on the close.
The employment Situation report for December showed that the labor market is almost at “full employment,” with job growth slowing and wages gaining. Gross Domestic Product (GDP) rose at a 3.5% inflation rate, its strongest rate in two years. With job growth slowing and wages increasing, the Fed’s plan for three rate hikes this year may still be on target.
U.S. crude oil, WTI, rose 0.4% to $53.99 per barrel. That along with the positive economic news helped strengthen the dollar, which rose 0.8% against a basket of 16 other currencies. The buck was especially strong vs. emerging market currencies, and rose 0.9% against the Chinese yuan.
The leading sector of the S&P 500 was technology (+1.0%); the iShares Nasdaq Biotechnology Index (ETF) (NASDAQ:IBB) rose 0.9%. All sectors, of the eleven, rose except telecom services (-2.7%) and real estate (unchanged).
On Friday’s close, the Dow Jones Industrial Average closed at 19,964 for a gain of 65 points, the S&P 500 rose 8 points to 2,277, the Nasdaq gained 33 points at 5,521, and the Russell 2000 fell 5 to 1,367. The NYSE’ s primary exchange traded 769 million shares with total volume of 3.3 billion shares, and the Nasdaq crossed 1.7 billion shares. On the Big Board, decliners led advancers by a small margin. On the Nasdaq, decliners led advancers by 1.2-to-1.
For the week: The DJIA rose 1%, the S&P 500 gained 1.75%, Nasdaq was up 2.6%, and the Russell 2000 rose 0.7%.
The Dow, as well as the S&P 500 and the Nasdaq (not shown), appear range-bound. However, the Dow had a new all-time high on Friday at 19,999.63 and had it closed there we could have trumpeted a breakout. However the all-time closing high was made on Dec. 20 at 19,974.52. Friday closed at 19,963.80 and smidgeons are important in the field of tech analysis.
Conclusion: Despite missing a new closing high, the Dow did achieve a new intraday high, thus breaking the resistance line for an hour or so and keeping the rally going with a gain for the day and for the week.
Broadly, the major indices are bullish and, in my opinion, are on the verge of a major breakout. It is disturbing that a major sector, retail, had a decline. However, that too is bullish since the market took the bad news without a break in trend. One of the marks of a powerful market is when bad news is ignored, and the DJIA did that by establishing a new intraday high.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.