Stocks rallied on Friday, but finished the week lower, as investors drew conflicting conclusions about what the latest payroll numbers mean for future Federal Reserve rate hikes.
The Dow Jones Industrial Average gained 401.97 points, or 1.26%, to close at 32,403.22. The S&P 500 advanced 1.36% to settle at 3,770.55, and the Nasdaq Composite rose 1.28% to finish at 10,475.25.
All the major averages capped off the week with losses. The Dow shed 1.4%, ending four weeks of gains. The S&P and Nasdaq fell 3.35% and 5.65%, respectively, to break two-week winning streaks.
October’s nonfarm payrolls report on Friday left investors divided, fueling some concern that the Fed will persist with its hiking campaign since the labor market added 261,000 jobs. Others interpreted the findings as a sign that the labor market is beginning to cool — albeit at a slow pace — since the unemployment rate rose to 3.7%.
“You see kind of a tale of two cities today,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial. “I don’t think the market quite knows how to gauge this employment number versus what the Fed signaled on Wednesday.”
Investors in recent days have struggled to decipher comments from Fed Chair Jerome Powell regarding whether a tightening pivot may come as the central bank fights to tame rising inflation and a strong economy. Focus also shifted toward next week’s consumer price index report. A drop in inflation could signal rate hikes are doing their job and fuel a potential shift.
In other news, hopes of a reopening in China pushed shares of U.S.-listed China stocks higher Friday, although the government hasn’t formally announced a pivot. Pinduoduo, JD.com and Alibaba shares surged.
Corporate earnings season also continued, with mobile payment company Block
surging 11% after beating expectations. Carvana
shared dropped 38% as it posted a wider-than-expected loss, while Twilio and Atlassian both plummeted on disappointing guidance.
Along with Thursday’s CPI report, investors are looking ahead to next week’s midterm elections.