Home / Markets News & Opinions / Dow Blindsided by Jobs Report – But Don’t Miss This Crucial Silver Lining

Dow Blindsided by Jobs Report – But Don’t Miss This Crucial Silver Lining

Last Updated September 23, 2020 1:28 PM
Josiah Wilmoth
Last Updated September 23, 2020 1:28 PM
  • The Dow Jones prepared to secure a weekly gain, though US stocks traded cautiously on Friday.
  • Futures suggested the Dow would open above 29,000, but a poor December jobs report muddied the outlook.
  • Investors shouldn’t miss a silver lining an otherwise disappointing batch of employment data.

The Dow unexpectedly found itself under pressure on Friday morning, after weak data in the December jobs report blindsided Wall Street.

The headline statistics spooked investors, and it’s not difficult to understand why. But there’s one critical data point that just jumped to its best level on record.

Dow Fails to Rally Past Historic 29,000 Mark

dow jones industrial average, stock market
The Dow is poised to secure a weekly gain, despite trading cautiously on Friday. | Source: Yahoo Finance 

The US stock market traded cautiously this morning after hitting record highs on Thursday.

  • The Dow Jones Industrial Average declined 20.54 points or 0.07% to 28,936.36.
  • The S&P 500 advanced 1.38 points or 0.04% to 3,276.08.
  • The Nasdaq rose 7.48 points or 0.08% to 9,210.91.

Commodities markets were also mixed. Crude oil declined 0.45%, slipping further below the $60 mark. The gold price was virtually flat above $1,550.

Jobs Report Blindsides Stock Market – But Don’t Overlook This Key Stat

Stock futures had pointed to much bigger gains at the open, but the government’s December jobs report sapped Wall Street’s momentum.

December Jobs Report Unexpectedly Weak

The US economy added 145,000 jobs in December , while private-sector wages grew by 2.9%. The unemployment rate held steady at 3.5%, a 50-year low.

Most of the gains came from construction and retail businesses. Manufacturing sector employment continued to struggle, closing the year with a net gain of just 46,000 jobs – an 83% decline from 2018.

december 2019 jobs report, impact on dow
The December jobs report was unexpectedly weak, which was made worse by expectations stoked by ADP’s report two days earlier. | Source: Labor Department 

The data weren’t terrible, but they came in moderately worse than expected. Most economists expected payrolls to rise by 160,000 and anticipated wage growth of around 3.1%.

Investors had been licking their chops ahead of the December jobs report, believing it would show underlying strength in the US economy. After all, ADP’s private payrolls report , which was released just two days ago, estimated that December job creation had smashed estimates.

And given that ADP’s reports often undershoot the Labor Department data , today’s data caught the market off guard.

Here’s the Silver Lining

Luckily, there’s a silver lining for Dow Jones bulls.

The number of discouraged workers – people who want to work but abandon their job search after failing to secure employment – fell to 277,000 in December, down from 98,000 the previous year.

The number of underemployed workers also declined.

Altogether, the percentage of discouraged and underemployed workers dropped to 6.7%, the lowest mark since the Labor Department began tracking this statistic in 1994 .

Boeing 737 MAX Designed by ‘Clowns’ and ‘Monkeys’

Boeing (NYSE: BA) added to the Dow’s woes by demonstrating that no matter how many consecutive devastating news cycles your company has suffered, there’s always room for at least one more.

According to “damning” internal messages released by Boeing , one employee said that the 737 MAX airplane model was “designed by clowns, who in turn are supervised by monkeys.”

Boeing remains the Dow’s most heavily-weighted stock (though Apple is rapidly gaining on the embattled aerospace giant), and it’s the primary reason the blue-chip index lagged the S&P 500 and Nasdaq in 2019.