NEW YORK (TheStreet) -- Good news about jobs on Friday was a double-edged sword for investors on Wall Street as fears flared up that it could mean a Federal Reserve rate hike sooner next year than anticipated.
The U.S. added 321,000 jobs to payrolls in November, the Labor Department said, the most since January 2012. That far exceeded estimates of a gain of 230,000 jobs and came in higher than October's 214,000 total. The unemployment rate remained at 5.8%, as expected.
"Over the last four years, we've put more people back to work than Europe, Japan, and all other advanced economies combined," said President Barack Obama in a press conference. "Our businesses have now created 10.9 million jobs over the past 57 months in a row ... the longest streak ... on record."
For the moment, optimism has eclipsed concerns that the unparalleled strength in the job market might push rates higher sooner. The Dow Jones Industrial Average rose 0.31%, setting fresh record levels. The S&P 500 climbed 0.16% and the Nasdaq jumped 0.24%.
"Everybody takes [the news] as a negative as much as a positive," said Brian Needleman, founder of Cornerstone Financial Partners, a firm which manages $950 million in assets. "People think it's great because it adds confidence to the market but the market itself basically sees it as a signal to the Fed to act and become more conservative in their forecasts as far as raising rates."
But the Fed likely won't be persuaded from just one robust report. "The Fed is not going to raise rates unless they see wages continuing to rise," said Prudential Financial market strategist Quincy Krosby in a call. "It's not going to be one report. They're going to want to see a series of it to make certain it's a trend, not a one-off."
U.S. factory orders, released Friday, fell 0.7% in October, more than the estimated 0.3% drop. A month earlier, factory orders slipped 0.6%.
European markets were rallying as German factory orders in October rose a better-than-expected 2.5%. The DAX added 1.7%, while France's CAC 40 surged 1.7%.
However, Germany's Bundesbank cut its growth forecasts for the next year to 1%, half of a previous estimate. "The German economy lost considerable momentum in the second and third quarters of 2014 and moved onto a flatter growth path," Germany's central bank said in a statement.
Among individual movers, Yahoo! (YHOO) was gaining 1% following an upgrade to "buy" from Bank of America. Analyst Justin Post said the rating change was "based on Alibaba (BABA) and tax upside potential." On the flipside, Post downgraded Google (GOOGL) to "hold" on increasing competition from Apple (AAPL) and Facebook (FB) . Shares slid 1.6%.
Gap (GPS) shares increased 0.49% after comparable-stoe sales in November rose 6% to $1.7 billion. The previous month saw a 3% drop. Big Lots (BIG) slipped 14.7% following a quarterly loss of 6 cents a share, a penny wider than estimated.