The Dow Jones Industrial Average capped the latest retreat in the current stock market with a mild loss of less than 0.1% Friday. Investors apparently stomached the surprise drop in net payrolls growth for February in the U.S. Some institutions seemed to treat the early decline as a buying opportunity.
At one point on Friday, however, the blue chip gauge expanded its total loss in five straight down sessions to as much as 3%.
That 3% downdraft is still mild compared with a 20.8% blast higher from the post-Christmas low of 21,712. And, since IBD’s Jan. 4 Big Picture column noted a turning point in the stock market with a follow-through on the same day, the Dow Jones Industrial Average also shows an advance of almost 12% from the Jan. 4 close of 23,433.
The S&P 500 and Nasdaq composite both lost about 0.2% Friday. Both major indexes fell more than 2% for the week, ending a 10-week winning streak for the latter. The S&P 500 had risen five weeks in a row.
The Innovator IBD 50 (FFTY) cut an early 1.7% loss to less than 0.3%, but still declined 3.5% for the week. The growth stock-focused exchange traded fund has climbed as much as 31.9% from its Christmas Eve low but is still trading on the south side of its long-term 200-day moving average.
FFTY, which gives investors a one-click method to invest in stocks that make up the IBD 50, gained 34% in 2017 and fell 16.8% in 2018.
Employment Report Moves Equities
John Lynch, chief investment strategist at LPL Financial, pointed out that the February U.S. payrolls report gave investors a reason to view the new data from a “glass is half full” angle. For starters, the February report of just 20,000 net new jobs added got impacted by the fact that early 390,000 non-agricultural employees were unable to work due to weather conditions.
Plus, payroll gains in January saw an upward revision to a net jobs increase of 311,000. February average hourly wages rose 3.4% vs. a year ago.
“While payroll growth has slowed, jobs gains over the past few months have been unexpectedly strong. Labor market strength remains a bright spot in the U.S. economy, and wages are growing at a healthy pace,” Lynch wrote in a note to clients.
Small caps also rebounded off session lows. The S&P SmallCap 600 also edged fractionally lower. At 934, the 600 finished the first full week of trading in March with a year-to-date gain of 10.6% vs. a 9.4% lift for the S&P 500.
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