Dow Poised for 29,000 Point Breakthrough; December Jobs Additions Disappoint

The Dow could pass 29,000 points for the first time Friday as global stocks continue to rally in the wake of ebbing military tensions between the U.S. and Iran.

The Friday Market Minute

  • Global stocks touch fresh all-time highs Friday as ebbing U.S.-Iran tensions, low interest rates and tame inflation continues to support risk markets.
  • President Donald Trump hints that the phase one U.S.-China trade agreement could be signed "shortly after' January 15, but investors still consider the deal hugely supportive for world stocks.
  • U.S. employers added 145,000 new jobs last month, according to the Labor Department, just shy of the 166,000 estimate, holding the unemployment rate at a 50-year low of 3.5%,
  • European stocks open at a fresh record high, following on from solid gains in Asia, as the global equity market rally charges on.
  • U.S. equity futures suggest fresh record highs on Wall Street Friday -- including 29,000-plus points for the Dow and 9,000-plus for the Nasdaq ahead of the December jobs report at 8:30 am Eastern time.

U.S. equity futures extended gains into record-high territory Friday, while global stocks responded with fresh all-time highs, as the relief rally following ebbing tensions between Washington and Tehran continues to lift risk markets around the world.

U.S. employers added a net new 145,000 new jobs last year, the Labor Department said, a figure that fell short of the 166,000 estimate and takes the 2019 total to just over 2 million.

Average hourly wages rose 2.9% from last year, the report showed, down from a 3.1% gain in November and well off the 3.4% peak from February. Downward revisions for November and October were also reported, taking the former to 256,000 (from 266,000) and 156,000 (from 152,000).

The MSCI World Index, a broad measure of stocks in markets across the globe, touched a fresh all-time high Friday following Thursday records on Wall Street and Europe, both of which continue to get support from accommodative central banks, low interest rates, tame inflation and improving domestic economies.

The expectation that the U.S. and China will sign their phase one trade agreement next week has also help driven this week's post-Iran strike recovery, although President Donald Trump alluded last night to the possibility that the deal could be signed "shortly after" his previously published date of January 15.

Futures contracts tied to the Dow Jones Industrial Average, which closed at an all-time high of 28,956.90 points Thursday, are priced to add 55 points at the opening bell, taking the benchmark past 29,000 for the first time in history.

"As each successive milestone is hit, investors get more optimistic up to a point, and 29,000 sets us up for a big break at 30,000," said Brad McMillan, chief investment officer at Commonwealth Financial Network. "The general public is still not fully committed to the rally, so that kind of break on the most known index could drive further gains." 

Contracts linked to the S&P 500, which has gained 1.36% so far in 2020, suggest a 6 point gain for the broader benchmark, while those tied to the tech-focused Nasdaq Composite index, which closed just 11 points from the 9,000 barrier, is set to add 30 points at the start of trading Friday, boosted in part by fresh record highs for Apple Inc.  (AAPL) - Get Report and Microsoft Corp.  (MSFT) - Get Report.

Apple shares, in fact, extended gains into fresh all-time highs Friday after analysts at Credit Suisse boosted their price target for the iPhone maker, citing sharply improving sales in China. 

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.1% to the upside at a two-week high of 97.51 in overnight trading even as Treasury note yields edged lower following solid demand for last night's auction of 30-year bonds, where foreign buyers took up nearly two-thirds of the $16 billion in paper that was put up for sale.

Global oil prices were little-changed in early European trading as investors attempted to hold the line on a week-on-week decline that has taken some 6% from U.S. crude prices, lurching them well back below levels seen on January 3, when a Trump-ordered drone strike killed Iranian Major-General Qaseem Soleimani.

Brent crude futures contracts for March delivery, the global benchmark for pricing, were last see seen 18 cents lower from their Thursday close in New York and trading at $65.19 per barrel, while WTI contracts for February, which are more tightly-linked to U.S gasoline prices, were marked 21 cents lower at $59.35 per barrel.

European stocks opened higher, printing fresh record highs for the Stoxx 600 benchmark, which rose 0.11% in the opening hours of trading in Frankfurt. U.K. stocks were also off to a solid start, supported by a modestly weaker pound, which drifted to 1.3068 against the dollar amid dovish Brexit-related comments from Bank of England Governor Mark Carney.

Overnight in Asia, extended declines for the Japanese yen, a traditional safe-haven currency for investors in the region, support stocks on the export-focused Nikkei 225 Friday, helping the benchmark to a 0.47% session gain. The MSCI ex-Japan index, meanwhile, added 0.48% despite late Friday weakness in Chinese stocks as gains in emerging market currencies supported the region-wide benchmark.