By Corrie Driebusch
U.S. stocks were little changed and bonds rose after data showed
U.S. jobs increased modestly in October and the unemployment rate
declined.
While the jobs report underscored the health of the U.S.
economy, investors said the numbers weren't so strong or so weak to
elicit a sharp market move in either direction.
"It's reinforcing the story that we have a moderate, improving
economy here but not a runaway economy," said Jim Swanson, chief
investment strategist and portfolio manager at MFS Investment
Management, which manages $429.5 billion. "It's better for the
stock market, but not a shocker in any direction."
The Dow Jones Industrial Average inched up 14 points, or 0.1%,
to 17568. The S&P 500 index added 1.7 points, or 0.1%, to 2032,
and the Nasdaq Composite Index slipped 3.8 points, or 0.1%, to
4635.
The yield on the 10-year Treasury note fell to 2.315% from
2.376% on Thursday. Yields fall as prices rise.
The U.S. added 214,000 jobs in October, the Labor Department
said Friday. Revisions showed the economy added 31,000 more jobs in
August and September than previously estimated. The unemployment
rate fell to 5.8%. Economists surveyed by The Wall Street Journal
had expected payrolls to rise by 233,000 in October and the
unemployment rate to remain 5.9%.
"Jobs growth was a little below what the market was looking for,
but overall under the hood there were a lot of positives that all
point to our central thesis that the labor market continues to
improve," said Michael Fredericks, portfolio manager of the
BlackRock Multi-Asset Income Fund, which manages $9.7 billion,
referring to the fall in the unemployment rate and the uptick in
labor participation.
Wages were up 2% compared with a year earlier, a pace just above
mild inflation. Economists have been watching for signs of stronger
wage growth, which should boost consumer spending and economic
expansion.
The jobs report capped a week when U.S. stocks advanced to
record highs. On Thursday, the Dow rose 0.4% to 17554.47, and the
S&P gained 0.4% to 2031.21. It was the Dow's 21st and the
S&P's 37th closing high for the year.
Since sinking into negative territory for the year in
mid-October amid worries about the pace of global economic growth,
the Dow has rallied, lifted by strong third-quarter corporate
earnings and upbeat U.S. economic data. Last week's decision by the
Bank of Japan to unexpectedly expand its stimulus measures also
drove shares higher.
The Federal Reserve's easy monetary policy has fueled
share-price gains in recent years.
After the U.S. central bank last month announced the end of its
bond-buying program, investors are focused on when officials are
likely to move to raise interest rates.
The steady improvement in the U.S. labor market has prompted
some investors to migrate back to the view that the Federal
Reserve's first interest-rate increase could happen in the middle
of 2015, and is likely to do so starting in September. Following
Friday's jobs report, expectations for a move at the July meeting
is now 40%, compared with 5.5% on Thursday, according to a CME
Group website. September has swung from 12% on Thursday to 59%
now.
Even though many investors are wary of rate increases, an
eventual increase in rates will be prompted by the Fed's
acknowledgment of a healthy economy, some say, which is a positive
environment for stocks.
"Dollar strength, wage acceleration and low commodity prices are
real benefits to consumers," said Michael Arone, State Street
Global Advisors' chief investment strategist. "That's good for the
economy and ultimately good for stocks."
In addition, rising labor force participation and a falling
unemployment rate also bode well.
"For equity markets it solidifies the case that we have
sufficient economic growth that can support not only earnings but
also revenues for corporations," said Anastasia Amoroso, Global
Market Strategist at J.P. Morgan Funds.
In commodity markets, crude-oil futures rose 1.5% to $79.08 a
barrel. That helped lift energy stocks, making energy the
top-performing sector on both the Dow and the S&P 500. Energy
stocks have taken a beating in recent months as the price of oil
has tumbled; in the past three months, energy companies in the
S&P 500 have fallen 7%.
"I think we're getting close to a bottom on oil prices," said
Joe Quinlan, chief market strategist at U.S. Trust, which manages
about $380 billion. "It's hard to find value after a six-year run
up in equities, and this gives you a good opportunity to buy some
good energy companies at good prices."
Gold futures gained 2.5% to $1170.70 an ounce.
Overseas, the Stoxx Europe 600 index fell 0.5%. The euro rose to
$1.2445 from $1.2375 on Thursday, when it hit the lowest level
since August 2012.
Walt Disney Co. said quarterly profit rose 8%. Adjusted
per-share earnings met expectations and revenue slightly beat
estimates, but shares fell 2.4%.
First Solar Inc. reported a 55% decline in third-quarter profit
as revenue fell more than expected. Shares fell 10.5%.
Saumya Vaishampayan contributed to this article.
Write to Corrie Driebusch at corrie.driebusch@wsj.com