BOSTON: U.S. stocks and Treasury were mixed in choppy trading on Friday as investors digested payroll data and its potential impact on Federal Reserve policy in the final session of an already rollercoaster first trading week of the year.
U.S. employment rose by a less-than-expected 199,000 jobs last month as the impact of a resurgent pandemic bites, well below the 400,000 forecast by economists, but data for November was revised higher. The unemployment rate dropped to 3.9%, underscoring tightening labor market conditions.
"Today's report should be eye-opening for the Fed as tight labor conditions are only going to exacerbate the building inflation problem," Charlie Ripley, senior investment strategist at Allianz Investment Management in Minneapolis, said.
"It would be surprising if the Fed is not contemplating a faster removal of policy accommodation at the January meeting."
Banking shares extended gains and battered technology stocks bounced from sharp declines suffered this week.
The Dow Jones Industrial Average rose 82.16 points, or 0.23%, to 36,318.63, the S&P 500 lost 10.73 points, or 0.23%, to 4,685.32 and the Nasdaq Composite dropped 113.49 points, or 0.75%, to 14,967.38.
Wall Street opens cautiously ahead of Fed minutes
It has already been a confusing week for stocks. After a start to 2022 marked by new highs, the mood changed on Wednesday after minutes from the Fed's December meeting signaled the central bank may have to raise interest rates sooner than expected.
Wall Street steadied by Thursday evening, though analysts at ING bank said the minutes were still reverberating across markets, driving bond yields higher, hitting growth stocks and supporting the dollar.
The MSCI All Country stock index was flat at 744.20 points, down nearly 2% from a record high on Tuesday. In Europe, the STOXX index was off 0.4% at 486.3 points, also off about 1.6% from a record high on Tuesday.
Supply Concerns
Longer-dated Treasury yields rose anew on Friday but shorter-term government bonds declined after the U.S. nonfarm payrolls. Analysts said the report was solid enough to keep the Fed on track to raise interest rates at its March meeting.
The yield on benchmark 10-year Treasury notes was last at 1.785%, up from 1.7461% before the payrolls data.
Euro zone inflation rose unexpectedly last month to 5% from 4.9% in November, a record high for the currency bloc, though unlike the Fed, the European Central Bank says prices will ease enough this year to avoid the need for rate hikes.
US stocks begin 2022 on positive note
The dollar index fell 0.44% to 95.832, erasing its past gains in the week.
Oil prices edged lower on Friday, as the market weighed supply concerns from the unrest in Kazakhstan and outages in Libya against a U.S. jobs report that missed expectations and its potential impact on Federal Reserve policy.
Slightly reversing large gains to start 2022, U.S. crude fell 0.88% to $78.76 per barrel and Brent was at $81.62, down 0.45% on the day.
Spot gold stood at $1,792 an ounce, slightly firmer on the day after touching a two-week low of $1,788.25 on Thursday, as rising U.S. Treasury yields hurt demand for the non-interest bearing metal.
Bitcoin slumped as much as 5% on Friday to its lowest since late September, amid a broader sell-off for cryptocurrencies driven by concerns about tighter U.S. monetary policy.
Bitcoin was last down about 3% at $41,837 after touching $40,938, its lowest since Sept. 29, as the payrolls data fueled some bargain buying.