Rally slows
Unemployment report fails to impress Wall Street.
NEW YORK — Investors made a small move back to safer assets Friday afternoon after the government’s November jobs report showed continued hiring but weak wages.
Indexes finished little changed as real estate and household goods companies rose, but banks, which have soared since the presidential election, took losses.
Most stocks finished higher, and the biggest gains went to companies that pay big dividends, similar to bonds. Investors also bought bonds, and prices rose and yields fell.
The dollar also weakened as investors expected less inflation. Thanks to a loss from Goldman Sachs, which closed at a nine-year high on Thursday, the Dow Jones industrial average dipped after closing at a record high a day before.
The jobs report called into question some of investors’ hopes about the state of the economy, and they reversed some of the moves they’ve made since the presidential election three weeks ago.
“It suggests that inflationary pressures maybe aren’t building as quickly, at least on the wage side, as some had supposed,” said Russ Koesterich, head of asset allocation for BlackRock’s Global Allocation Fund. He said investors want to see a combination of strong wage growth and stimulus spending to boost the economy in 2017. The weak wage figures throw that into doubt.
“You’re less likely to see inflation build if people aren’t getting paid more because they can’t afford to spend more,” Koesterich said.
Sluggish pay gains have been a chronic problem for the economy and have provided less incentive for those who have dropped out to resume job hunts. Average hourly pay slipped in November and has risen just 2.5 percent in the past year.
The S&P 500 and Nasdaq fell this week after a three-week rally took them to record highs. The Dow finished little changed.