The US stock market in 2019 had a stellar year with all major stock market indexes having significant gains. With 2020 just having started, what will it bring for stocks and their valuation?

The latest US jobs report for December 2019 released on Friday, January 10, 2020 was mixed for the US economy.

“The U.S. labor market capped off 2019 with fewer than expected job gains and decelerating wage growth. The joblessness rate, however, held at a 50-year low. Here were the main results from the Department of Labor’s report Friday compared to consensus estimates compiled by Bloomberg:

Change in non-farm payrolls: +145,000 vs. +160,000 expected and +256,000 in November

Unemployment rate: 3.5% vs. 3.5% expected and 3.5% in November

Average hourly earnings, month on month: +0.1% vs. +0.3% expected and +0.3% in November

Average hourly earnings, year on year: +2.9% vs. +3.1% expected and +3.1% in November”

                                                                                                                                Source: Yahoo Finance

Latest geopolitical tensions between US and Iran had little and short-lived impact on stocks and the risk sentiment as well. As we are heading later this year to the presidential elections the chance of President Trump being reelected and the earnings season, which will soon start will add volatility to the stock market.

For the week of January 6 – January 10, 2020 the major US stock market indexes closed as follows on Friday, January 10, 2020:

• Dow Jones Industrial Average: Close 28823.77, +0.66% for the week, +1.00% Year-to-date

• S&P 500 Index: Close 3265.35, +0.94% for the week, +1.07% Year-to-date

• NASDAQ: Close 9178.86, +1.75% for the week, + 2.30%, Year-to-date

• Russell 2000: Close 1657.64, -0.19% for the week, -0.65% Year-to-date

Weekly Stocks Gainers

These are the top 3 gainers, stocks with 5 days of consecutive price advances:

1. Nautilus Group (NYSE:NLS), Close 3.22, 5-day change +80.90%

2. Oneconnect Financial Technology Co. Ltd America (NYSE:OCFT), Close 15.82, 5-day change +52.12%

3. Pfsweb Inc (NASDAQ:PFSW), Close 4.91, %-day change +39.09%

Weekly Stocks Losers

These are the top 3 losers, stocks with 5 days of consecutive price declines:

1. Inpixon (NASDAQ:INPX), Close 4.05, 5-day change -80.22%

2. Pier 1 Imports (NYSE:PIR), Close 3.50, 5-day change -43.82%

3. Osmotica Pharmaceuticals Plc (NASDAQ:OSMT), Close 4.90, 5-day change -29.80%

Stock Market Commentary

 “Nonfarm payrolls in the US increased by 145 thousand in December 2019, the least since May, and following a downwardly revised 256 thousand rise in the previous month and below market expectations of 164 thousand. The biggest job gains occurred in retail trade and health care, while mining lost jobs. The decline can be partially due to a later-than-normal Thanksgiving Day in 2019, which could have shifted hiring of seasonal workers, and to a boost in November from the return of workers from a GM strike. In 2019, payroll employment rose by 2.1 million, the least since 2011.”

Source: Trading Economics

The weak figure for the US jobs report during December 2019 had a negative impact on the US stock market on Friday, January 10, 2020. But this lower than expected figure should be monitored for future trends, especially the jobs in manufacturing sector which shows recently severe weakness. It is still too early in 2020, and if we consider the previous very strong jobs figure an outlier in the latest trend for jobs, then perhaps market expectations are simply too optimistic. We will have to wait for next month’s job report to analyze any seasonality effects on the jobs market. A weak job trend is not optimistic for the US economy, especially as the stock market is now near record highs.

Sources:   Wall Street Journal, Barchart.com