U.S. stocks fell on Friday, although major indexes recovered from their lowest levels, as the November payrolls report fueled expectations the Federal Reserve would maintain its path of interest rate hikes to combat 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 increase.
The U.S. unemployment rate remained unchanged, as expected, at 3.7%.
Investors have been looking for signs of weakness in the labor market, especially wages, as a precursor to faster cooling of inflation that will enable the Fed to slow and eventually stop its current rate hike cycle.
Stocks had rallied earlier in the week after Fed Chair Jerome Powell’s comments on scaling back interest rates hikes as early as December.
Still, equities were off their lowest levels of the day that saw each of the major indexes tumble at least 1%.
“If anything, I am actually encouraged by how the market is clawing its way back from the level we were at today, it is another indication the market is looking for at least a seasonal December rally,” said Sam Stovall, chief investment strategist at CFRA in New York.
“The market is beginning to look across the valley and say, ‘OK, a year from now the Fed will likely be on hold and considering cutting rates.'”
The rate-setting Federal Open Market Committee meets on Dec. 13-14, the final meeting in a volatile year that saw the central bank attempt to stifle the fastest rate of inflation since the 1980s with record interest rates increases.
The Dow Jones Industrial Average (.DJI) fell 99.32 points, or 0.29%, to 34,295.69, the S&P 500 (.SPX) lost 21.92 points, or 0.54%, to 4,054.65 and the Nasdaq Composite (.IXIC) dropped 85.66 points, or 0.75%, to 11,396.79.
Even with Friday’s weakness, the S&P 500 and Nasdaq were poised for a second straight week of gains, while the Dow showed modest losses for the week.
Information technology shares (.SPLRCT) bore the brunt of selling pressure among the 11 major S&P 500 sectors, down 1.23% as the worst performer on the day.
Declining issues outnumbered advancing ones on the NYSE by a 1.22-to-1 ratio; on Nasdaq, a 1.01-to-1 ratio favored decliners.
The S&P 500 posted 17 new 52-week highs and no new lows; the Nasdaq Composite recorded 59 new highs and 84 new lows.