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Stocks gyrated on Friday with the S&P 500 headed for a slight decline on the week as a 5-week comeback in the benchmark takes a breather despite economic data that backed bulls hopes for an economic soft landing.
The Dow Jones Industrial Average gained 24 points, or 0.1%. The S&P 500 hovered near the flatline, earlier hitting a high of the session of 4,606.31 that put it within a point of its 2023 peak. The Nasdaq Composite rose 0.15%.
November’s nonfarm payrolls report showed an unexpected drop in the unemployment rate. The jobless rate fell to 3.7% in November from 3.9% the prior month. It was expected to remain the same. The economy added 199,000 jobs, slightly ahead of the 190,000 estimate from Dow Jones and well ahead the 150,000 jobs added in October.
The data first raised concerns the economy was running too hot for inflation to cool enough for the Fed to start retreating from its high-rates policy. Some traders expect the Fed to start cutting rates as early as March.
On the other hand, the monthly jobs report could also support the notion that the Fed is guiding the U.S. economy toward a soft landing — a steady economic recovery amid falling inflation. Average hourly earnings, seen as a leading indicator of inflation, rose about as expected in November as the economy added more jobs than the prior month.
Meanwhile, a closely watched University of Michigan survey showed inflation expectations drop and consumer sentiment jump in December to it highest level since July.
“Those arguing for a soft-landing have the evidence to support them today, the only caveat being the economy may not be coming in for a landing at all, as it is still up in the air flying high,” said Christopher Rupkey, chief economist at FwdBonds. “Time will tell if this extended growth and moderate jobs creation reignite inflation pressures that force Fed officials to keep rates higher for longer next year.
The Fed will deliver its latest policy decision Wednesday.
For the week, the Nasdaq’s gained 0.2%, while the S&P is down 0.2%. The Dow is on pace for a 0.3% weekly loss.
In other news, Paramount Global shares surged nearly 14% on reports that Skydance and RedBird Capital were pursuing a takeover of National Amusement, which owns the majority of the media giant’s voting shares. Carrier Global shares jumped more than 5% on news that it’s selling a business unit to Honeywell. The industrial stock lost 2%.
Correction: A previous version misstated the S&P 500’s week-to-date performance.
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