Markets
The Dow Jones Industrial Average was first published in 1896. The average passed 1,000 in 1972, some 54 years later.
And here we are, 130 years later, breaking through 50,000.
Stocks were mixed last week, with broad gains on Monday and Friday bookending midweek selling pressure as investors digested earnings results from more than 100 S&P 500 companies.
The Standard and Poor’s 500 Index ended the week roughly where it started, slipping 0.10 percent, while the Nasdaq Composite Index declined 1.84 percent. The Dow Jones Industrial Average rose 2.50 percent. By contrast, the MSCI EAFE Index, which tracks developed overseas stock markets, rose 0.49 percent.1,2
Dow 50,000
Stocks bound out of the gate on Monday, with the Dow leading a broad rise across all three major averages. Markets rose in anticipation of a big week for fourth quarter corporate reports.3
Market sentiment quickly changed on Tuesday, as anxious investors appeared to rotate out of technology names and into cyclical areas of the economy more likely to rebound with an improving economy.
News on Wednesday that private sector job growth slowed in January added to investor anxiety. Stocks fell again on Thursday, with the S&P 500 briefly turning negative year to date.4,5
Then things turned around.
Stocks rebounded broadly on Friday as investors appeared to buy the dip. The Dow led, closing above the 50,000 level for the first time. The tech heavy Nasdaq closed back above 23,000, while the S&P gained 2%. The latest University of Michigan survey showed consumer sentiment rose to its highest level in six months, helping buoy investor sentiment.6
Fed Watch, Jobs Data Showing Weakness?
The brief government shutdown that ended last week delayed several economic reports. The federal employment report for January, originally due on February 6, has been delayed until Wednesday, February 11.
However, payroll processor ADP reported on Wednesday that private employers added 22,000 jobs in January, about half of the 45,000 expected. Then, on Thursday, outplacement firm Challenger, Gray & Christmas reported that companies cut more than 108,000 jobs in January, the highest number of layoffs for any January since 2009.7,8
Investors tried to reconcile the reports with the Fed’s January post meeting statement, which read, “Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has shown some signs of stabilization. Inflation remains somewhat elevated.”
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