New York – U.S. stocks closed with slight losses Friday, although investors were heartened by weak labor-market data that seemed to point to an imminent pause in the Federal Reserve’s current series of rate hikes.
Investors have been puzzled recently as to whether the Fed will lift rates again at its monetary-policy meeting Tuesday.
Earlier soft data on nonfarm payrolls were seen as providing the strongest possible incentive for the central bank to pause, sparking a morning rally.
But the rally ran out of steam in the early afternoon.
“The Fed-is-done rally ran its course,” said Peter Boocvar, equity strategist at Miller Tabak. “The idea that the Fed may not lift next week already is priced into the market. Also the market is facing a slowing economy and slowing earnings.”
The Dow Jones industrial average closed down 2.24 points at 11,240.35.
The S&P 500 Index ended down 0.91 point at 1,279.36, while the Nasdaq Composite Index ended 7.29 points lower at 2,085.04.
For the week, the Dow rose 0.2 percent, the S&P 500 gained 0.1 percent and the Nasdaq Composite gave up 0.4 percent.
Volume was light, with 1.71 billion shares traded on the New York Stock Exchange and advancing stocks outnumbering declining shares by 9-to-7. There were 1.87 billion shares traded in the Nasdaq market, with losers outnumbering winners by 4-to-3.
The interest-rates question dominated investors’ minds Friday.
The Labor Department said that non-farm payrolls increased by 113,000 last month and that June’s growth was revised to 124,000, as the nation’s unemployment rate rose to 4.8 percent in July from 4.6 percent in June. This marked the highest jobless rate since February.
Economists surveyed by MarketWatch had been expecting payroll gains of about 143,000 for July.
At the same time, the Labor Department’s report also showed inflation in wages, a factor that could persuade the Fed to continue raising rates. Average hourly earnings last month rose 0.4 percent and are up 3.8 percent on a year-on-year basis. Economists had been expecting a 0.3 percent gain in earnings.
“The market is looking at the top-line numbers and is saying that it appears that the economy is slowing and the job market is slowing,” said Peter Cardillo, chief market analyst at S.W. Bach.
“All indications are that the Fed probably will pause next week,” Cardillo added. “But I’m not so sure, because we also have an inflation problem.”
However, Tony Crescenzi, chief bond-market analyst at Miller Tabak, said that economic slowing will soothe the inflation pressures.
