US stocks closed mixed after stumbling between small gains and losses on Friday as stronger-than-expected jobs data led investors to adjust expectations around when the Federal Reserve will pause its rate hike campaign.
The Labor Office monthly jobs report for november showed payrolls grew by 263,000, higher than estimated, while unemployment remained at 3.7%. Bloomberg expected a circulation of 200,000 For the month.
The S&P 500 (^GSPC) fell 0.1%, while the Dow Jones Industrial Average (^DJI) had increased by that margin. The tech-heavy Nasdaq Composite (^IXIC) decreased by 0.2%. All three major sessions were outside the session lows of more than 1% immediately after release.
“Another strong jobs report and strong wage growth confirm that the Fed’s job is not done yet,” Lazard Asset Management Head of US Equity Ron Temple said in a note. final rates, and how long the Fed will keep rates there.”
On the commodity markets, the European Union green-lit for a $60 price cap on Russian oil, curbing an upward trend in prices. West Texas Intermediate Futures (WTI) closed lower at about $80 a barrel, but were up 5% this week.
Friday’s moves come after a mostly bullish week for stock markets, with sentiment rising on Federal Reserve Chairman Jerome Powell’s indication of a moderating the rate of interest rate hikesand China eased some COVID lockdowns after concerns over restrictive virus controls.
But the jobs report seemed to upset the market’s plans for weekly gains and a so-called Santa Claus Rally, as stocks tended to bounce in the run-up to the holiday season. The higher-than-expected job numbers and continued strong wage growth were further signals that the Fed would continue its campaign to raise rates, even as the pace slows.
For the month, equities got off to a mediocre start, with a mixed finish across key averages on Thursday, December 1. However, according to Ryan Detrick of Carson Groupthere is no month in which the S&P 500 is more likely to end with a profit than December: the reference index has risen 75% of the time since 1950.
Treasury Secretary Janet Yellen said at a conference in New York earlier this week that the jobs report is the single most important data point – next to inflation data – that policymakers look to when determining monetary decisions as they take action to restore price stability.
“The U.S. labor market is beginning to show tentative signs of weakening, but only at the margins,” DataTrek’s Nicholas Colas said in an email newsletter Friday, calling the jobs report an “important data point” to watch.
Central bankers have been working to ease labor market tightness caused by excessive job vacancies, which has put upward pressure on wages and contributed to rising prices. But many fear that the momentum in the labor market, which has encouraged officials to continue with aggressive rate hikes, will cause them to overshoot and send the US economy into recession.
In his 2023 economic outlook earlier this year, Bank of America’s Michael Gapen warned that the momentum in the labor market could lead to a rise in the federal funds rate to 6%, even as the bank’s forecast calls for a final interest rate of 5.00-5.25% in May .
While job numbers have so far reflected the resilience of the US employment picture, economists expect job growth to trend downward as the impact of higher interest rates lags behind. BofA expects the unemployment rate to reach 5.5% in 2023, while Morgan Stanley expects 4.3% and Goldman Sachs forecasts a half percentage point increase to 4.2%.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc