NEW YORK (TheStreet) -- Stocks declined Friday morning as wage growth slipped unexpectedly in December. However, despite the effect on overall inflation, wage growth won't likely be an impediment to a Federal Reserve rate hike, according to some analysts.
"The Fed has stated its desire to see wage growth accelerate before it tightens policy; but it was also made clear in the December minutes this week that rate hikes could occur even if inflation is floundering. For now, as the Fed doesn't consider the drop in inflation anything more than transitory, it's unlikely that the wage figures ruffle too many feathers," said DailyFX currency analyst Christopher Vecchio in a note.
Average hourly earnings fell 0.2% in December after increasing 0.2% the month earlier, the Labor Department said Friday. For the year, earnings posted their smallest gain since October 2012, up just 1.7%.
"What it basically shows is that the average worker is keeping his head above water but he's not really doing a lot better," said Gary Thayer, Wells Fargo head of global macro strategy, in a call.
On the upside, however, a fall in the unemployment rate to 5.6% marked its lowest level since June 2008 and it could keep falling to below 5% by year-end, according to Deutsche Bank analyst Oksana Poltavets. Economists had expected the unemployment rate in December to fall to 5.7% from 5.8% in November.
The latest jobs report closes out a year with the best employment gains in 15 years. The U.S. added 252,000 jobs in December, coming in better than a forecast increase of 240,000. This marks the 11th consecutive month of job gains above 200,000. November's blockbuster jobs number was upwardly revised to an even better 353,000.
The S&P 500 fell 0.87%, the Dow Jones Industrial Average slipped 0.64%, and the Nasdaq declined 0.79%. The drops follow a two-day rally in which equities rose around 3% after days of punishing losses because of cratering oil prices.
"We're coming off of two days of really strong gains so I think there might have been a lot of buying in anticipation of a good report," added Thayer. "Maybe some people are taking profits or holding back a bit, looking forward to other economic news next week."
European markets were lower as Germany's industrial production for November unexpectedly fell for the first time in three months. The reading came in 0.1% lower for the month, down from an upwardly revised 0.6% gain in October. Economists had expected an increase of 0.3%.
The European Central Bank is reportedly considering government bond purchases worth 500 billion euro, according to Bloomberg. This would mark the first step in widely anticipated monetary stimulus measures to revive the eurozone's faltering economy,
Germany's DAX fell 1.5%, France's CAC 40 was down 1.8%, and London's FTSE 100 dropped 0.96%.
China's inflation came close to a five-year low, slumping for its 34th straight month. December's producer price index dropped 3.3% year on year, falling despite a slight uptick in consumer inflation over the month. China's Shanghai Composite closed 0.24% lower.
Macy's (M) shares were down 3.2% after announcing restructuring plans and the closure of 14 of its stores. The retailer will book charges of around $110 million in costs related to restructuring.
Starbucks (SBUX) shares fell more than 3% as its chief operating officer and long-time executive, Troy Alstead, announced he was taking extended unpaid leave from the company as of March 1. The absence was not explained further.
Wet Seal (WTSL) plummeted more than 33% on a Wall Street Journal report the company could file for bankruptcy as soon as next week. Earlier this week, the teen retailer announced plans to close 338 stores and cut 3,700 jobs.
Bed, Bath & Beyond (BBBY) was sliding 8% after failing to raise its fourth-quarter guidance above consensus. The retailer expects net profit between $1.78 a share and $1.83 a share, in line with an expected $1.80 a share.
Yelp (YELP) shares were 4.1% higher after Bank of America upgraded the stock to "buy," crediting its positive view to the Internet company's "position as a local category leader with a strong position on mobile."
--Written by Keris Alison Lahiff in New York.