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Wall Street closes modestly lower after jobs report

The S&P 500 closed slightly lower on Friday, although major indexes rallied off their worst levels of the day, as the November payrolls report fueled
expectations the Federal Reserve would maintain its path of interest rate hikes to combat inflation.

December 3, 2022
By Chuck Mikolajczak
3 December 2022

By Chuck Mikolajczak

NEW YORK, Dec 2 (Reuters) – The S&P 500 closed slightly
lower on Friday, although major indexes rallied off their worst
levels of the day, as the November payrolls report fueled
expectations the Federal Reserve would maintain its path of
interest rate hikes to combat inflation.

The Labor Department’s jobs report showed nonfarm payrolls
rose by 263,000, above expectations of 200,000 and wage growth
accelerated even as recession concerns increase.

The U.S. unemployment rate remained unchanged, as expected,
at 3.7%.

“Wage growth has been in an uptrend since August,” said
Brian Jacobsen, senior investment strategist at Allspring Global
Investment in Menomonee Falls, Wisconsin.

“We will have to see that trend reverse for the Fed to be
comfortable with a pause. Until then, they’ll continue to taper
towards a pause.”

Investors have been looking for signs of weakness in the
labor market, especially wages, as a precursor to faster cooling
of inflation that will enable the Fed to slow and eventually
stop its current rate hike cycle.

Stocks had rallied earlier in the week after Fed Chair
Jerome Powell’s comments on scaling back interest rates hikes as
early as December.

According to preliminary data, the S&P 500 lost 5.17
points, or 0.13%, to end at 4,071.40 points, while the Nasdaq
Composite lost 20.76 points, or 0.18%, to 11,461.69. The
Dow Jones Industrial Average rose 26.73 points, or 0.08%,
to 34,421.74.

Still, equities ended the session off their lowest levels of
the day that saw each of the major indexes tumble at least 1%.

“If anything, I am actually encouraged by how the market is
clawing its way back from the level we were at today. It is
another indication the market is looking for at least a seasonal
December rally,” said Sam Stovall, chief investment strategist
at CFRA in New York.

“The market is beginning to look across the valley and say,
‘OK, a year from now the Fed will likely be on hold and
considering cutting rates.'”

The rate-setting Federal Open Market Committee meets on Dec.
13-14, the final meeting in a volatile year that saw the central
bank attempt to stifle the fastest rate of inflation since the
1980s with record interest rates increases.

Even with Friday’s weakness, the major averages notched a
second straight week of gains.

Growth and technology companies such as Apple Inc,
down and Amazon were pressured by concerns over rising
rates. The S&P 500 growth index declined while technology
shares were the worst performing among the 11 major
S&P 500 sectors.

Ford Motor Co declined on lower vehicle sales in
November, while DoorDash Inc was lower after RBC
downgraded the food delivery firm’s stock.
(Reporting by Chuck Mikolajczak; Editing by Cynthia Osterman)

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