Higher wages push stocks to records

Associated Press

NEW YORK

So close! The Dow Jones industrial average missed the 20,000 mark by a fraction of a point Friday as U.S. 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, 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 U.S. 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.”

Stocks finished the week with a big gain as investors remained optimistic about the U.S. economy. The Labor Department said U.S. 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.