U.S. Stocks Mixed After Jobs Report
December 02 2016 - 5:45PM
Dow Jones News
By Aaron Kuriloff and Riva Gold
The S&P 500 eked out a slight gain Friday, but posted its
first weekly decline since Donald Trump was elected president.
Investors have pulled out of long-dated government bonds and put
money into financial and industrial shares since Election Day,
helping push major U.S. indexes to record highs. Many expect Mr.
Trump's policies to include fiscal stimulus and reduced regulation,
driving expectations for stronger growth and higher inflation.
But the rally stalled this week. Gains in energy shares --
spurred by soaring oil prices -- weren't enough to offset declines
elsewhere, particularly in technology shares.
U.S. stocks were mixed after Friday's jobs report, which showed
unemployment falling to its lowest level in nine years in November,
doing little to alter major indexes' overall performance for the
week. Meanwhile, the rout in U.S. government bonds eased.
Some analysts said weakness in average hourly wages suggested
the Federal Reserve would remain on a slow path of interest-rate
increases, but that the jobs report contained enough signs of
labor-market strength to keep the central bank on course to raise
rates this month as expected.
"The biggest risk to stock markets is the significant rise in
rates," said Krishna Memani, chief investment officer at
OppenheimerFunds.
A meaningful repricing of the path for U.S. interest rates could
"bring down the equity market on its own," he said.
The Dow Jones Industrial Average fell 21.51 points, or 0.1%, to
19170.42 Friday but held onto a 0.1% gain for the week.
The S&P 500 and the Nasdaq Composite Index, however, posted
weekly declines for the first time since the week ended Nov. 4.
The S&P 500 rose 0.87 point, or less than 0.1%, to 2191.95
Friday and lost 1% over the week, while the Nasdaq Composite rose
4.55 points, or 0.1%, to 5255.65 Friday -- a weekly decline of
2.7%.
Dividend stocks were among Friday's gainers after the jobs
report.
U.S. employers added a seasonally adjusted 178,000 jobs in
November from the previous month, the Labor Department said.
Economists surveyed by The Wall Street Journal had forecast a gain
of 180,000. The unemployment rate fell to 4.6% last month, the
lowest since August 2007, from 4.9% in October.
Shares of real-estate companies climbed 1.2% in the S&P 500
while utilities rose 0.9%. Financials, which have tended to move
inversely from such bond proxies, fell 0.9%.
The WSJ Dollar Index, which measures the U.S. currency against
16 others, fell 0.4%.
Energy shares were the week's best performers, gaining 2.6% in
the S&P 500 as crude-oil prices surged after the Organization
of the Petroleum Exporting Countries agreed to pull back their
output. U.S. crude rose 12% to $51.68 a barrel, the largest
one-week percentage gain since 2009.
Meanwhile, the tech sector fell 2.9% in the week, weighing on
the tech-heavy Nasdaq. Tech shares have suffered since the election
amid concerns about the potential for stricter trade and
immigration policies under President-elect Donald Trump's
administration.
The Stoxx Europe 600 fell 0.9% for the week, with Italy's FTSE
MIB index posting a weekly gain of 3.5% ahead of Sunday's Italian
referendum on constitutional reform. The vote has some investors
worried that political uncertainty in Italy could increase pressure
on the country's banks and lift support for euroskeptic parties
across the Continent.
The FTSE MIB sits 20% lower in 2016, while Italian bank shares
are down nearly 50% and the yield gaps between 10-year Italian
bonds and their Spanish and German counterparts are near their
widest in years.
"Given the underperformance of Italian bonds and equities over
the course of this year, a lot of bad news seems to be already in
the prices, " said Stefano di Domizio, head of fixed income at
Absolute Strategy Research.
"We're keen to play the contrarian trade," he said, as a "no"
vote on Sunday could still lead to the relatively benign outcome of
a technocratic caretaker government, while a "yes" vote would be
market friendly, he said.
Write to Aaron Kuriloff at aaron.kuriloff@wsj.com and Riva Gold
at riva.gold@wsj.com
(END) Dow Jones Newswires
December 02, 2016 17:30 ET (22:30 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.