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Stocks Close Higher Despite Job Losses

"I would have to broadly describe the report as being pretty disappointing," said Keith Hembre, chief economist and chief investment strategist at First American Funds of Minneapolis, who was struck by declines in labor participation rates. "Basically if the participation rate were the same as it was back in August, then the unemployment rate would be up significantly."

The labor participation rate was 64.6% in December, and there were 929,000 discouraged workers, compared with 642,000 a year ago.

Still, Hembre expects job numbers to venture into positive territory in the coming months.

"We're moving toward stability in the labor market. We're not there yet. Unemployment is extremely high and it will be extremely slow to fall but the implication for the Fed is that we're a ways off from them raising interest rates."

Prices on two-year Treasury notes rose, with the yield down to 0.972%.

Wall Street has been preoccupied with the report throughout the week, as employment data has filtered in. On Wednesday, the ADP jobs report showed that private employers cut 84,000 jobs in December, and on Thursday, initial jobless claims came in at 434,000, adding 1,000 from the previous week but growing at a milder rate than Wall Street expected.

With the labor market struggling, curbed access to credit and declining borrowing led to a record $17.5 billion tumble in consumer credit for November, according to Federal Reserve statistics released in the afternoon. Consensus forecasts estimated a $5 billion drop.

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