By Wallace Witkowski, MarketWatch , Ryan Vlastelica

Fewer jobs added in November than had been expected

U.S. stocks struggled for direction Friday with the Dow industrials finishing lower and the S&P 500 and the Nasdaq closing slightly higher as investors digested a weaker-than-expected payroll report, favoring sectors viewed as safe in economically uncertain times.

The Dow Jones Industrial Average , which flipped between gains and losses, closed down 21.51 points, or 0.1%, at 19,170.42, for a weekly gain of 0.1%, barely continuing a four-week winning streak. The blue-chip average was led lower by shares of Goldman Sachs Group Inc.(GS) and Caterpillar Inc.(CAT)

The S&P 500 finished up 0.87 points at 2,191.95, for a weekly loss of 1%. Defensive sectors such as real estate, utilities and consumer staples were among the biggest outperformers of the day, with the S&P real-estate sector up 1.2%. So-called defensive sectors tend to draw buyers during times of uncertainty because they offer comparatively higher dividends, as opposed to high levels of growth, underscoring how market participants seem torn between growth expectations and current valuations.

The Nasdaq Composite Index closed up 4.55 points, or 0.1%, at 5,255.65, for a weekly loss of 2.7%, its worst weekly decline since before the Nov. 8 election.

The Russell 2000 index , which has been one of the biggest gainers of the postelection rally, is down 2.5% for the week, which would represent the small-cap gauge's worst weekly fall since the final week of October.

Wall Street has rallied over the past three weeks, with major indexes hitting a series of records since the U.S. presidential election. Investors are betting that President-elect Donald Trump will advocate for policies, such as tax cuts and deregulation, that could accelerate economic growth.

Although that view hasn't diminished, and few see the bull market's days as numbered, it may be difficult for investors to justify current market levels, given how long it may take for the impact of any new policies to translate into corporate profits.

"The market has been rising on expectations that things will get better in terms of government policy," said Bruce McCain, chief investment strategist at Key Private Bank. "As it will take time for those changes to come out of the government and show up in corporate earnings, it is safe to say we've come too far too fast, even while the trajectory is still there."

The uncertainty was underlined by the November jobs report (http://www.marketwatch.com/story/us-jobless-rates-hits-nine-year-low-of-46-in-november-2016-12-02), which showed 178,000 jobs added in the month, fewer than had been expected, while the count over the prior two months was reduced. However, the jobless rate fell sharply to a nine-year low of 4.6%.

While the number of new jobs pointed to a labor market that continues to improve, it also suggested a moderation in growth, though not one severe enough to influence the expectation that the Federal Reserve would raise interest rates in December.

Read:November unemployment rate drop 'not all good news,' say economists (http://www.marketwatch.com/story/november-unemployment-rate-drop-not-all-good-news-say-economists-2016-12-02)

Outside the U.S., there was caution ahead of the Italian constitutional-reform referendum (http://www.marketwatch.com/story/if-italy-votes-no-in-sundays-referendum-do-this-says-strategist-2016-12-01) on Sunday, which analysts fear could trigger a new wave of financial jitters in the eurozone. If Italian voters reject the proposals -- and polls point toward this outcome -- it could lead to resignation of Italian Prime Minister Matteo Renzi, as well as the dissolution of Italy's government.

While that vote could potentially roil international markets, Randy Frederick, managing director of Trading & Derivatives at Schwab Center for Financial Research, played down the effect it may have on U.S. stocks given that domestic markets have largely digested the jobs report and a December Fed rate hike is all but a certainty.

"The Italian vote probably won't have an impact either way," said Frederick. "Our market will largely shrug it off."

Movers and shakers: Shares of Starbucks Corp.(SBUX) closed down 2.2% a day after the coffee chain said Howard Schultz will step down as chief executive in April (http://www.marketwatch.com/story/starbucks-shares-fall-on-announced-ceo-departure-2016-12-01).

Shares of Ulta Salon Cosmetics & Fragrance Inc.(ULTA) sank 1.6% even as the beauty-store chain lifted its outlook for the year late Thursday (http://www.marketwatch.com/story/ulta-salon-lifts-full-year-outlook-again-2016-12-01).

Discount retailer Big Lots Inc.(BIG) rose 1.2% after lifting its full-year adjusted profit outlook (http://www.marketwatch.com/story/big-lots-posts-surprise-revenue-decline-2016-12-02). The stock had previously traded sharply higher on the day.

Vascular Solutions Inc.(VASC) rose 1.6% following news it will be taken over by Teleflex Inc.(TFX) in a deal valued at $1 billion (http://www.marketwatch.com/story/vascular-to-be-bought-by-teleflex-in-a-1-billion-deal-2016-12-02). Teleflex shares jumped 4.5%.

Square Inc.(SQ) shares advanced 2.8% after Deutsche Bank upgraded the payment company's stock.

Other markets:Asian stocks were lower on Friday (http://www.marketwatch.com/story/nikkei-pulls-back-from-record-high-as-trump-effect-fades-2016-12-02), while European stocks traded 0.4% lower (http://www.marketwatch.com/story/european-stocks-at-3-week-low-on-italy-worries-lower-oil-prices-2016-12-02), with investors staying cautious ahead of Italy's referendum.

Read:If Italy rejects Renzi's reforms, then this is how to play stocks, says J.P. Morgan strategist (http://www.marketwatch.com/story/if-italy-votes-no-in-sundays-referendum-do-this-says-strategist-2016-12-01)

Crude oil (http://www.marketwatch.com/story/oil-prices-edge-lower-as-investors-assess-what-opec-oil-deal-can-deliver-2016-12-02) rose 1.2% to settle at $51.68 a barrel, extending its recent advance. The commodity has soared more than 12% this week, the largest weekly gain of the year, following an agreement by OPEC to cut product seen as necessary to stabilizing prices.

The ICE dollar index was down 0.4% at 100.69 (http://www.marketwatch.com/story/dollar-edges-down-before-us-releases-monthly-jobs-report-2016-12-02), while gold (http://www.marketwatch.com/story/gold-firms-pausing-sharp-dollar-driven-slide-2016-12-02) settled up 0.7% at $1,177.80 an ounce, supported by the weaker dollar.

--Sara Sjolin in London contributed to this article.

(END) Dow Jones Newswires

December 02, 2016 16:36 ET (21:36 GMT)

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