Wall Street closed mostly higher despite a decline in jobs due to the lockdowns — and more in Friday’s stock market recap.
Excluding the Dow, the other three major indexes traded to fresh all-time highs shortly after the opening bell as the outlook for continued stimulus supported the bullish sentiment.
The Nasdaq soared 1% after testing a record high of 13,208.
The S&P 500 climbed 0.6% with the lifetime peak hitting 3,826.
The Dow was up 0.2% after trading to an opening high of 31,140.
The Russell 2000 fell 0.3% despite tapping an all-time high of 2,113.
Consumer Discretionary and Real Estate were the strongest sectors with gains of 2.1% and 1.1%, respectively. Materials and Industrials were the leading sector laggards after falling 0.5% and 0.2%.
Shares of Sarepta Therapeutics Inc. (Nasdaq: SRPT) plunged 51% after a key gene-therapy study produced disappointing results. The company said its one-time treatment for the rare disorder Duchenne muscular dystrophy failed to show benefits compared with a placebo.
The unexpected news raised serious concerns on the potential for the therapy with a slew of analyst downgrades following the news. Data suggests the drug works, but its path to approval will be complicated and extended with modest benefits.
For the week, the Russell 2000 jumped 5.9%; the Nasdaq soared 2.4%; the S&P 500 rose 1.8% and the Dow was up 1.6%. When the “First Five Days of January” are positive, it is typically a bullish signal for the stock market.
Over the past 45 years, if January’s first five trading days are positive, the major indexes have posted full-year gains nearly 85% of the time. In the seven down years, four were related to war, with the other years mostly flat according to the Stock Trader’s Almanac.
European markets ended the week on a high note following better-than-expected economic news out of Germany.
France’s CAC 40 and the Stoxx 600 rose 0.7% while Germany’s DAX 30 was higher by 0.6%. The Belgium20 gained 0.5% and the UK’s FTSE 100 added 0.2%.
German industrial output was up 0.9% for November with exports rising 2.2%.
Asian markets settled mostly higher despite China locking down a city near Beijing following a rise in coronavirus infections.
South Korea’s Kospi zoomed 4% and Japan’s Nikkei jumped 2.4%. Hong Kong’s Hang Seng rallied 1.2% and Australia’s S&P/ASX 200 advanced 0.7%. China’s Shanghai slipped 0.2%.
Nonfarm payrolls dropped -140,000 in December following the 336,000 rise in November. The unemployment rate was unchanged at 6.7%. Average hourly earnings were up 0.8% versus the 0.3% gain in November, while the average weekly hours dipped to 34.7 versus 34.8. Household employment edged up 21,000 after rising 140,000 in November, while the labor force increased 31,000 following the previous -182,000 decline. The labor force participation rate was flat at 61.5%. Private payrolls were down -95,000. The goods producing sector added 93,000 workers and manufacturing jobs gained 38,000. Meanwhile, there was a -188,000 drop in service sector employment with much of the weakness in the leisure, hospitality area which saw a -498,000 tumble in jobs. Government employment fell -45,000.
Federal Reserve Vice Chairman Richard Clarida sees no current need to adjust the pace or terms of quantitative easing and is not concerned about the 10-year yield rising above the 1% level. He sees a possible transitory rise in inflation over the springtime that could top 2%. With the new policy framework — where prices will be allowed to run hot — he said it will be quite some time before the Fed starts to think about tapering.
Clarida said the duration of the bond buying program will depend on the speed of the recovery. The next several months will be challenging, he warned, but he expects the economy to deliver impressive results in 2021. He also said the drop in employment in December was disappointing, though labor market weakness is not likely to continue.
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) was down for the fifth straight session following the second-half fade to $150.66. Longer-term and upper support from late March at $151-$150.50 was breached but held. A close below the latter would indicate additional weakness towards $149.50-$149.
Lowered resistance is at $151.50-$152.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) fell for the fourth straight session with the intraday low tapping 21.42. Current and upper support at 21.50-21 was breached but held. A move below the latter would signal a possible retest towards 20.50-20 with the late-November low at 19.51.
Lowered resistance is at 23-23.50 followed by 24.50-25 and the 50-day moving average.
The S&P 400 Mid Cap Index (NYSE: MID) had its three-session winning streak snapped despite testing an all-time high of 2,434 shortly after the opening bell. Unchartered territory and lower resistance at 2,425-2,450 was breached but held. A close above the latter would indicate further momentum towards 2,475-2,500.
Support is at 2,400-2,375 followed by 2,325-2,300.
RSI (relative strength index) is showing signs of leveling out with key resistance from early June at 75 holding. A move above this level would signal a possible run towards 80 and the overbought peak from early October 2017. Support is at 70-65.
The iShares MSCI Emerging Markets ETF (NYSE: EEM) surged to a late-day and fresh multi-year high of $54.74. Longer term and lower resistance at $54.50-$55 was cleared and held. A move below the latter would be a bullish signal for additional strength towards $55.50-$56 and levels from October 2007.
Fresh support is at $54-$53.50 with a close below $53 suggesting a possible near-term top.
RSI is in an uptrend with key resistance at 75 getting cleared and holding. Continued closes above this level would indicate strength towards 80-85 and overbought levels from February 2018. Support is at 70.
Check back after the closing bell for the most important news and numbers in the WealthPress stock market recap.