By Chuck Mikolajczak
NEW YORK (RockedBuzz via Reuters) – The S&P 500 closed slightly lower on Friday, even as major indexes recovered from the day’s worst levels, as November’s payrolls report stoked expectations that the Federal Reserve would maintain its upward path interest rates to fight inflation.
The Labor Department’s jobs report showed nonfarm payrolls rose by 263,000, above expectations by 200,000, and wage growth accelerated despite mounting recession fears.
The US unemployment rate remained unchanged as expected 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 will need to see this trend reverse for the Fed to feel comfortable with a pause. Until then, they will continue to taper towards a pause.”
Investors have been looking for signs of weakness in the labor market, particularly in wages, as a harbinger of a more rapid cooling in inflation that will allow the Fed to slow and eventually stop its current rate-hiking cycle.
Stocks had rallied earlier in the week after Fed Chairman Jerome Powell’s comments on scaling interest rate hikes as early as December.
The Dow Jones Industrial Average was up 34.87 points, or 0.1%, to 34,429.88, the S&P 500 was down 4.87 points, or 0.12%, to 4,071.7 and the Nasdaq Composite is dropped 20.95 points, or 0.18%, to 11,461.50.
However, shares ended the session from the day’s lowest levels which saw each of the major indexes plunge at least 1%, with the Dow posting a slight gain.
“If anything, I’m actually encouraged by how the market is recovering to where we were today. It’s another indication that the market is looking for at least a December seasonal rally,” said Sam Stovall, chief investment strategist at CFRA at New York.
“The market is starting to look across the valley and say, ‘OK, a year from now the Fed will probably be on standby and consider cutting rates.'”
The Federal Open Market Committee is meeting Dec. 13-14, the latest meeting in a volatile year that saw the central bank attempt to stifle the fastest rate of inflation since the 1980s with record hikes in interest rates.
The major averages marked a second consecutive week of gains, with the S&P 500 rising 1.13%, the Dow gaining 0.24% and the Nasdaq rising 2.1%.
Growth and tech companies like Apple Inc, down 0.34% and Amazon, down 1.43%, were pressured by concerns over rate hikes, but trimmed losses as US Treasury yields fell all day from previous highs. The S&P 500 Growth Index fell 0.29%, while technology stocks were among the worst performers among the 11 major S&P 500 sectors with a decline of 0.55%.
Ford Motor Co lost 1.56% on falling vehicle sales in November, while DoorDash Inc fell 3.38% after RBC downgraded shares in the food delivery firm.
Advancing issues outnumbered declining issues on the NYSE by a ratio of 1.15 to 1; on the Nasdaq, a ratio of 1.35 to 1 favored the advanced.
The S&P 500 made 20 new 52-week highs and no new lows; the Nasdaq Composite recorded 86 new highs and 92 new lows.
(Reporting by Chuck Mikolajczak; Editing by Cynthia Osterman)
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