Stocks close little changed after strong jobs report

U.S. stocks closed mixed after stumbling between small gains and losses on Friday as stronger-than-expected jobs data prompted investors to readjust their expectations for when the Federal Reserve will halt its rate hike campaign.

Ministry of Labor monthly jobs report for november showed that payrolls rose by 263,000, more than expected, while the unemployment rate held at 3.7%. Bloomberg expected print run of 200,000 for the month.

S&P 500 (^GSPC) fell 0.1%, while the Dow Jones Industrial Average (^DJI) was up by that margin. The tech-heavy Nasdaq Composite (^IXIC) fell 0.2%. All three major sessions were off session lows of more than 1% immediately after the release.

Another strong employment report and strong wage growth confirm that the Fed’s work is not yet done,” Lazard Asset Management head of US equity Ron Temple said in a note. “Investors should reassess their optimism about the end of policy tightening — both the level of terminal rates and how long the Fed keeps rates there.”

In the commodity markets of the European Union gave the green light to a price ceiling of $60 on Russian oil, limiting the upward trend in prices. West Texas Intermediate (WTI) futures closed lower at around $80 a barrel, but rose 5% for the week.

Friday’s moves come after a mostly upbeat week for equity markets, with sentiment lifted by Federal Reserve Chairman Jerome Powell’s indication of moderation in the rates of interest rate increasesand China is easing some COVID lockdowns after uproar over restrictive virus controls.

But the jobs report appeared to throw a wrench in the market’s plans for weekly gains and a so-called Santa Claus rally, as stocks tended to jump ahead of the holidays. The higher-than-expected jobs numbers, as well as continued strong wage growth, provided further signals that the Fed will continue its campaign to raise interest rates, albeit at a slower pace.

Stocks got off to a weak start to the month with the major averages closing mixed on Thursday, the first day of December. However, according to Ryan Detrick of the Carson Groupthe S&P 500 is no more likely to end December with a gain: The benchmark has been up for the month 75% of the time since 1950.

Treasury Secretary Janet Yellen said at a conference earlier this week in New York that the jobs report is the most important data point — in addition to inflation data — that policymakers are watching in making monetary decisions as they take action to restoring price stability.

“The U.S. labor market is starting to show temporary signs of softening, but only on the fringes,” DataTrek’s Nicholas Collas said in an emailed bulletin Friday, calling the jobs report “an important data point” to watch.

Central bankers are working to ease the tightening of the labor market, driven by excessive job creation, which is putting upward pressure on wages and contributing to rising prices. But many worry that the momentum in the labor market, which has encouraged officials to push for aggressive rate hikes, will cause them to overshoot and send the U.S. economy into recession.

In his 2023 economic outlook earlier this year, Bank of America’s Michael Gapen warned that momentum in the labor market could push the federal funds rate up to 6%, although the bank’s forecast called for a terminal rate hike. rate of 5.00-5.25% until May.

While the jobs numbers so far reflect the resilience of the U.S. employment picture, economists expect job growth to trend downward as the impact of higher interest rates catches up. BofA expects the unemployment rate to reach 5.5% in 2023, while Morgan Stanley expects 4.3% and Goldman Sachs forecasts a rise of half a percentage point to 4.2%.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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