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NEW YORK (CNNMoney.com) -
Stocks were mixed Friday and for the week, as investors welcomed a strong November jobs report, but also showed caution amid its implications for higher interest rates.
The Dow Jones industrial average (down 35.06 to 10,877.51, Charts) lost about 0.3 percent. The S&P 500 (up 0.41 to 1,265.08, Charts) was little changed and the Nasdaq composite (up 6.17 to 2,273.37, Charts) gained 0.3 percent.
Treasury prices were barely lower, lifting the corresponding yields and the dollar was mixed versus other major currencies.
Friday's choppy trade spoke to a broader bout of consolidation this week with investors pulling back a bit after a more than five week rally.
The Dow 30 and S&P 500 closed lower for the week, snapping a five-week winning run. But the Nasdaq managed to close higher, extending its win streak to seven weeks and setting it at a new 4-1/2 year high.
"After five up weeks, it's ok to have a week like this," said James Awad, president at Awad Asset Management, noting that one flat to lower week does not mean an end-of-the-year rally is tapped out. A combination of solid fundamentals and a positive seasonal bias should enable further stock gains in December, he said.
Worried about rate hikes
Employers added 215,000 jobs to their payrolls in November, the Labor Department said Friday morning, in a report that suggested the labor market has recovered from the impact of hurricanes Katrina and Rita in the early fall. Employers added a revised 44,000 jobs in October.
The job gain was roughly in line with both economists' forecasts and the average monthly gain seen the first 8 months of this year before the hurricanes. The unemployment rate, generated by a separate survey, held steady at 5 percent, also hitting analysts' forecasts. (Full story).
While the news was positive, it also served to revive bets that the Fed will keep raising short-term rates for the foreseeable future.
"The payrolls number was pretty much on target, and it seemed to confirm that we are going to have rate hikes in December and January," said Hilary Kramer, chief investment strategist for A&G Capital Group.
"If the number had been much lower than estimates, we might have seen a strong stock advance, much higher and we would have seen a selloff," she added. "But the market basically got what it expected, and we just had a great day yesterday, so you're not seeing a big reaction."
Stocks rallied Thursday, bouncing back after three sessions of consolidation at the end of an otherwise strong November.
The Fed indicated recently that it may soon end it's campaign of measured rate hikes, leading investors to speculate that the fed funds rate, the overnight bank lending rate controlled by the Fed, would settle at 4.5 percent or maybe even 4.75 percent.
But a string of solid economic reports this week has cast doubt on that assumption. A speech Friday afternoon by President of the San Francisco Fed Janet Yellen was also hawkish on rate hikes.
"Investors are still somewhat skeptical of strong economic numbers," said Peter Cardillo, chief market analyst at S.W. Bach & Co. "What they are focussing on now is when the Fed will end their rate hiking campaign."
What moved?
Market breadth was positive. Advancers narrowly edged decliners on the New York Stock Exchange, where 1.53 billion shares traded, and on the Nasdaq, where 1.79 billion shares changed hands.
Strength in chips and Internet shares gave a boost to the Nasdaq composite, although gains were limited by a selloff in biotech.
Novellus Systems (up $0.83 to $26.02, Research), Intel (up $0.25 to $27.43, Research) and Broadcom (up $1.18 to $48.77, Research) were among the chips boosting the Philadelphia Semiconductor (up 3.68 to 505.59, Charts) index, or the SOX.
MedImmune (down $0.63 to $35.47, Research) slipped about 2 percent after a downgrade from brokerage Thomas Weisel Partners. It was one of several biotechs weighing on the Amex Biotechnology (down 2.48 to 676.93, Charts) index.
Homebuilders rose, lifting the Dow Jones Home Construction (up $11.16 to $943.86, Research) index by more than 1 percent.
The Dow was a bit weaker than the other major gauges. Among the stocks falling, General Motors (down $0.53 to $22.08, Research), Honeywell (down $1.20 to $36.06, Research) and McDonald's (down $0.42 to $34.91, Research) were among the big losers.
Treasury prices were barely lower, with the 10-year note yield at 4.51 percent, little changed from late Thursday
The dollar gained modestly versus the euro and the yen.
U.S. light crude oil for January delivery rose 85 cents to settle at $59.32 a barrel on the New York Mercantile Exchange.
COMEX gold for December delivery rose 80 cents to $503.30 an ounce.
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