Higher wages push US stocks to records; Dow nears 20,000

NEW YORK – So close! The Dow Jones industrial average missed the 20,000 mark by a fraction of a point Friday as US stock indexes rose after the government said wages jumped in December. Two other major indexes set records.

Stocks wavered between gains and losses in the morning after the December jobs report, which showed less hiring than analysts hoped to see. Bond yields rose sharply, as the continued job gains should encourage the Federal Reserve to keep raising interest rates.

Indexes turned higher as investors concluded that the rising wages will lead to more spending on technology and consumer goods. Industrial companies rose as investors hoped for greater economic growth.

Sam Stovall, a US equity strategist for S&P Capital IQ, said there was good news for most industries. That’s because workers are being paid more, but the report won’t push the Fed to raise rates quickly in order to stave off inflation.

“Consumers are earning a bit more and as a result can spend more,” he said. “But ... people are not too worried the Fed will have to slam on the brakes.”

At about 12:40 p.m. the Dow peaked at 19,999.63, but later lost steam. It finished up 64.51 points, or 0.3 percent, at 19,963.80. The S&P 500 rose 7.98 points, or 0.4 percent, to 2,276.98. The Nasdaq composite jumped 33.12 points, or 0.6 percent, to 5,521.06.

The small-cap Russell 2000 index slid 4.65 points, or 0.3 percent, to 1,367.28.

Stocks finished the week with a big gain as investors remained optimistic about the US economy. The S&P 500 climbed 1.7 percent. That was a marked change from last year, when the index lost six percent as the market got off to its worst opening week in history.

The Labor Department said US employers added 156,000 jobs in December, which was solid but slightly disappointing. However, the government said hourly pay jumped 2.9 percent from December 2015, the biggest monthly increase in seven years. Overall, job growth remained steady in 2016 but slowed a bit from 2015.

The biggest gains went to companies that stand to benefit from higher wages and greater spending by consumers. Among technology companies, Facebook rose $2.74, or 2.3 percent, to $123.41 and Apple gained $1.30, or 1.1 percent, to $117.91. Amazon had its second big gain in a row and added $15.54, or two percent, to $795.99 while travel website TripAdvisor picked up $1.57, or 3.2 percent, to $50.77.

Industrial companies, which have climbed since the presidential election two months ago, also fared well. Machinery and equipment maker Honeywell rose $1.77, or 1.5 percent, to $118.53.

Bond prices fell. The yield on the 10-year Treasury note rose to 2.42 percent from 2.35 percent. Higher bond yields mean higher interest rates, which allow banks to make more money on lending. Investment banks and other financial firms did better than the rest of the market Friday afternoon. SunTrust Banks rose 63 cents, or 1.1 percent, to $55.53 and Goldman Sachs jumped $3.58, or 1.5 percent, to $244.90.