Stocks finished mixed on Friday, with Wall Street not certain how much credence to give to a dismal December payrolls report, given just how far afield it was from expectations and other economic reports that have signaled an improving labor market.
The Dow Jones Industrial Average ended 7 points in the red, with Chevron fronting losses that included 16 of its 30 components. The oil producer fell 2 percent after it said its profit would drop 31 percent from a year ago in the fourth quarter.
The S&P 500 gained less than five points, with utilities and materials the best performing and financials lagging among its 10 major industry groups.
The Nasdaq gained 18 points.
"I'm stunned by it, it's just not supportive of the trend we've seen," John Lynch, regional chief investment officer at Wells Fargo Private Bank, said of the Labor Department's tally of an additional 74,000 to non-farm payrolls last month. That was far below estimates of about 200,000, with the unemployment rate falling to 6.7 percent, as the labor force participation rate fell to its lowest in more than three decades.
"The market reaction is how everyone is feeling, it's such an outlier, it contradicts every other report we've seen," said JJ Kinahan, chief strategist at TD Ameritrade. That said, "there are a few things in there to be concerned about, primarily the participation rate, and that the jobs created were primarily in retail. And health care jobs were lost, that's an area where we've seen good growth," Kinahan said.
Wall Street's focus is about to do an about-face, as "we have so many earnings, especially financials, coming out next week, so Monday morning, that will the the topic. Financials will be the bellwether for how the earnings season is going to go," said Kinahan. Results expected in the week ahead from major banks, including JPMorgan Chase, Wells Fargo, Bank of America, Citigroup.
Target stock fell after the discount retailer hiked its estimate of customers affected by the recent mass data breach to up to 110 million, saying sales had been "meaningfully weaker than expected." Alcoa declined over 5 percent after the aluminum producer reported fourth-quarter profit below expectations.
"Maybe it was the weather, maybe it was the governor of New Jersey, but something caused this to happen and I would pay close attention to next month's revision for possible clues," offered Kevin Giddis, a managing director and fixed-income analyst at Raymond James, of Friday's jobs data, which left equities wavering but prompted a decisive drop in borrowing costs, at least in those reflected in the 10-year Treasury yield.
The dollar fell against currency rivals, and the 10-year Treasury yield fell 10 basis points to 2.866 percent.
On the New York Mercantile Exchange, crude futures climbed $1.06 to $92.72 a barrel, bouncing back from the prior day's settlement, which had oil futures at an eight-month low. Gold futures rose $17.50 to $1,246.90 an ounce.
"The tapering process is going to become more of a parlor game," said Lynch at Wells Fargo, referring to the Federal Reserve's recent decision to start cutting its monthly bond purchases, with improvement in the labor market cited as key to Fed policy moves. Lynch added.
After a speech to the Indiana Bankers Association Friday, Federal Reserve Bank of St. Louis President James Bullard said the central bank was unlikely to react to one month's jobs report, and that the Fed was likely to continue to taper-off the bond-buying, a process that began this month.
Another economic report on Friday from the Commerce Department had wholesale inventories rising 0.5 percent in November to $516.4 billion.
President Obama nominated three officials to the Fed's board of governors on Friday, including former Bank of Israel governor Stanley Fischer as vice chairman.
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