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Dow Struts Boldly into 2020 Thanks to Stellar Jobs Data

Last Updated September 23, 2020 1:27 PM
Josiah Wilmoth
Last Updated September 23, 2020 1:27 PM
  • The Dow jumped nearly 150 points during the first trading day of 2020.
  • Strong jobs data pointed to a healthy US economy.
  • Could the United States really be recession-proof?

As the stock market ushers in its first trading day of the new year, not even the most rabid Wall Street bulls expect 2020’s returns to match those from last year. But if the Dow Jones Industrial Average does plan to perform a 2019 encore, it took the first step in the right direction on Thursday.

Dow Surges into 2020

All of Wall Street’s major indices raced higher during 2020’s opening session.

The Dow advanced 140.89 points or 0.49% to 28,679.33.

dow jones industrial average chart
The Dow rallied more than 100 points during the first trading day of 2020. | Source: Yahoo Finance 

The S&P 500 rose 17.27 points or 0.53% to 3,248.05.

The Nasdaq climbed 78.46 points or 0.87% to 9,053.48 to round out a bullish day for US stocks.

Despite the risk-on move in equities, the gold price rallied nearly 0.5%, topping the $1,530 mark.

Tight Labor Market Points to Strong Consumer Economy

The Dow’s New Year’s bounce accompanied a stellar batch of jobs data, which showed that the US labor market remains tight heading into the economy’s third calendar decade of expansion.

Following two straight weeks of worse-than-expected jobless claims, initial unemployment filings fell to 222,000  last week, meeting economist estimates.

us jobless claims
US jobless claims fell for the third consecutive week. | Source: Trading Economics 

The less-volatile four-week moving average climbed to its highest level in two years, but this figure should decline sharply once outlier data tinged by the late Thanksgiving holiday cycles out next week.

Meanwhile, new data from Challenger, Gray & Christmas Inc. reveals that year-over-year job cuts plunged 25% in December. The 32,843 firings was the lowest number since July 2018.

Altogether, 2019 was a bad year for firings. The 592,556 announced job cuts statistic was the largest since 2015  – and the third-highest total of the decade. But the sharp decline in December job cuts suggests that cooling trade tensions, coupled with stable – if unspectacular – economic growth augur a brighter labor market forecast.

“Confidence was high heading into the last month of the year,” Andrew Challenger, vice president of the staffing firm, said. “With some resolutions occurring in the trade war and strong consumer spending in the fourth quarter, companies appear to be taking a wait-and-see approach as we head into 2020.”

Labor market health points to strength in US consumer spending, which has fortified the economy against recession warnings even as the trade war and slowing growth have pummeled the once-mighty manufacturing sector.

Goldman Sachs: US Economy Safe from Traditional Recession Triggers

According to Goldman Sachs, the US economy may be as recession-proof  as it’s ever been. Writing in the final days of 2019, a team of Goldman economists declared that none of the traditional recession triggers appears to be a major concern.

While new risks could emerge, none of the main sources of recent recessions — oil shocks, inflationary overheating, and financial imbalances — seem too concerning for now. As a result, the prospects for a soft landing look better than widely thought.

To be sure, new threats will likely emerge. But for now, Goldman says the economy seems poised to enjoy a “soft landing” – not a hard crash.