Stock investors focus on downside of strong job data

Stock indexes closed mostly lower Friday after a blockbuster report on the U.S. job market that offered both good and bad news for Wall Street.

The benchmark Standard & Poor’s 500 ended just 0.2% lower after recovering from an early slide as investors reacted to the report, which showed that U.S. employers unexpectedly added hundreds of thousands more jobs than forecast last month.

The data suggest the economy may not be in a recession, as feared. But the numbers also undercut investors’ speculation that a slowing economy may mean a peak for inflation soon. That means the Federal Reserve may not let up on its aggressive rate hikes to combat inflation as early as hoped.

“It’s a reminder for investors on how uncertain Fed policy is going forward and the strong jobs market data shows just how far the Fed has to go,” said Charlie Ripley, senior investment strategist at Allianz Investment Management.

Stocks of technology and other high-growth companies once again took the brunt of the selling amid the rising-rate worries. The tech-heavy Nasdaq composite index cut its early losses and closed down 63.03 points, or 0.5%, at 12,657.55.

The good news on the job market helped to limit losses for the Dow Jones industrial average, whose stocks tend to move more with expectations for the overall economy. It added 76.65 points, or 0.2%, to close at 32,803.47.

The S&P 500 slipped 6.75 points to 4,145.19. Both the S&P 500 and Nasdaq posted a gain for the week.

Treasury yields shot higher immediately after the release of the job data. The two-year Treasury yield, which tends to track expectations for Fed action, jumped to 3.23% from 3.05% late Thursday. The 10-year yield, which influences rates on mortgages, rose to 2.84% from 2.69%.