- Job growth is exceeding expectations
- Unemployment rate stable at 3.7%
- Ford falls on lower car sales in November
- Dow 0.1% up, S&P 500 down 0.12%, Nasdaq down 0.18%
NEW YORK, Dec. 2 (Reuters) – The S&P 500 closed slightly lower on Friday, though major indices hit their worst levels of the day as November’s payroll report fueled expectations that the Federal Reserve would continue its course of rate hikes to fight the to inflation.
The Labor Department’s jobs report showed nonfarm payrolls rose by 263,000, above expectations of 200,000, and wage growth accelerated even as recession concerns mounted.
The US unemployment rate, as expected, remained unchanged at 3.7%.
“Wage growth has been on an upward trend since August,” said Brian Jacobsen, senior investment strategist at Allspring Global Investment in Menomonee Falls, Wisconsin.
“We’ll have to see that trend reverse for the Fed to feel comfortable with a pause. Until then, they will continue to taper into a pause.”
Investors have been looking for signs of weakness in the labor market, especially wages, as a harbinger of a more rapid cooling of inflation, which could allow the Fed to slow and eventually halt the current cycle of rate hikes.
Stocks were up earlier in the week following comments from Fed Chairman Jerome Powell about tapering rate hikes as early as December.
The Dow Jones Industrial Average (.DJI) rose 34.87 points, or 0.1%, to 34,429.88, the S&P 500 (.SPX) lost 4.87 points, or 0.12%, to 4,071.7 and the Nasdaq Composite (.IXIC) fell 20.95 points, or 0.18%, to 11,461.50.
Still, stocks ended the session at their lowest levels of the day, with each of the major indices plunging at least 1%, with the Dow posting a slight gain.
“If anything, I’m encouraged by how the market is working its way back from the level we were at today. It’s another indication that the market is looking at least for a seasonal rally in December,” said Sam Stovall, chief investment strategist at CFR in New York.
“The market is starting to look across the valley and say, ‘Okay, a year from now the Fed will probably be on hold and consider cutting rates.'”
The Federal Open Market Committee that sets interest rates will meet on December 13 and 14, the latest meeting in a volatile year in which the central bank attempted to quell the highest inflation rate since the 1980s with record interest rate hikes.
The major averages posted gains for a second week in a row, with the S&P 500 up 1.13%, the Dow up 0.24% and the Nasdaq up 2.1%.
Growth and tech companies such as Apple Inc (AAPL.O), down 0.34%, and Amazon (AMZN.O), down 1.43%, were weighed down by concerns about rising interest rates, but stalled the declines when US Treasury yields fell earlier during the day off highs. The S&P 500 Growth Index (.IGX) fell 0.29%, while technology stocks (.SPLRCT) were among the worst performers of the 11 major S&P 500 sectors, falling 0.55%.
Ford Motor Co (FN) fell 1.56% on lower car sales in November, while DoorDash Inc (DASH.N) lost 3.38% after RBC cut stock of the food delivery company.
Emerging issues outnumbered declining issues on the NYSE by a ratio of 1.15 to 1; on Nasdaq, a ratio of 1.35 to 1 was in favor of progress.
The S&P 500 posted 20 new highs in 52 weeks and no new lows; the Nasdaq Composite recorded 86 new highs and 92 new lows.
Reporting by Chuck Mikolajczak; Edited by Cynthia Osterman
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