By Stephen Culp
NEW YORK (Reuters) – U.S. stock indexes settled for a mixed close and benchmark Treasury yields rebounded after a U.S. jobs report showed an uptick in unemployment, cementing expectations that the Federal Reserve will let interest rates stand at its September meeting.
The three major indexes gave up earlier advances, losing momentum as the session progressed and investors digested the data ahead of the long U.S. holiday weekend.
The S&P 500 and the Dow ended modestly green, while the tech-laded Nasdaq closed nearly unchanged.
All three indexes notched gains on the week.
“Today, people are coasting into the holiday weekend with relief that the job numbers were solid,” said Ryan Detrick, chief market strategist at Carson Group in Omaha.
“There are signs of the economy slowing, which is what the Fed wants to see,” Detrick added. “It likely opens the door for no rate hike at the next Fed meeting in three weeks.”
The Labor Department’s payrolls report showed the U.S. economy added more jobs than expected last month, but the rising unemployment and participation rates, along with a welcome cool-down in average hourly wage growth, solidified expectations that the Fed will let key interest rates stand this month.
Financial markets are pricing in a 93% likelihood of such a pause this month, according to CME’s FedWatch tool.
But what the Fed will do beyond September remains an open question.
The Dow Jones Industrial Average rose 115.8 points, or 0.33%, to 34,837.71, the S&P 500 gained 8.11 points, or 0.18%, to 4,515.77 and the Nasdaq Composite dropped 3.15 points, or 0.02%, to 14,031.82.
European stocks steadied, ending the session flat as a decline in luxury and auto shares was offset by gains in mining and healthcare. The STOXX 600 posted its biggest weekly gain since mid-July.
The pan-European STOXX 600 index lost 0.01% and MSCI’s gauge of stocks across the globe gained 0.10%.
Emerging market stocks rose 0.51%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.25% higher, while Japan’s Nikkei rose 0.28%.
U.S. 10-year Treasury yields reversed earlier declines following the employment report, as investors pared positions ahead of the Labor Day weekend.
“(The economy) might be slowing but we still have an economy led by a very strong consumer,” Detrick said. “Higher yields may be the anticipation of a better economy down the road.”
Benchmark 10-year notes last fell 23/32 in price to yield 4.1788%, from 4.091% late on Thursday.
The 30-year bond last fell 48/32 in price to yield 4.2945%, from 4.204% late on Thursday.
The greenback advanced against the euro and the yen, rising against a basket of world currencies. The dollar index registered its seventh consecutive weekly gain.
The dollar index rose 0.65%, with the euro down 0.62% to $1.0774.
The Japanese yen weakened 0.42% versus the greenback at 146.18 per dollar, while Sterling was last trading at $1.2588, down 0.67% on the day.
Oil prices jumped, touching their highest level in over seven months, driven by expectations of tightening supply.
U.S. crude surged 2.3% to settle at $85.55 per barrel, while Brent settled at $88.55 per barrel, up 1.98% on the day.
Gold prices wavered throughout the session but were last slightly higher.
Spot gold rose 0.04% to $1,940.36 an ounce.
(Reporting by Stephen Culp; Editing by Conor Humphries, Josie Kao and Andy Sullivan)