Stocks slid as investors hemmed and hawed over whether a blowout jobs report was a good or bad thing.
The S&P 500 fell 0.42%, the Dow Jones Industrial Average slid 0.32%, and the Nasdaq was flat.
U.S. payrolls added 271,000 jobs in October, according to the Labor Department, well above estimates of 205,000. U.S. hourly wages posted their biggest year-over-year gain in six years, rising 0.4% over the month. The unemployment rate fell to 5%, a seven-and-a-half-year low.
The stronger-than-expected jobs report is both a blessing and a curse. On the one hand, it shows that the U.S. economy is back on the growth track after several months of weakness. On the other, this makes a December rate hike even more likely, especially after Federal Reserve Chair Janet Yellen made clear earlier in the week that the next meeting there is a "live" possibility for an increase.
This month's report had taken on added significance as one of the two the Fed will have to analyze before a rates decision is made in December.
"The much bigger-than-expected ... surge in nonfarm payrolls in October confirms that the weakness in August and September was just a temporary blip and, given the circumstances, a December interest rate hike would now appear to be the most likely outcome," said chief U.S. economist at Capital Economics Paul Ashworth.
In other deals news, Alibaba (BABA - Get Report) and Chinese streaming company Youku Tudou (YOKU) have agreed to a merger. The Chinese e-commerce company will pay $27.60 per Youku American Depositary Share, a 35% premium to its closing price in mid-October. The deal is expected to close in the first quarter of next year. Youku shares jumped 9% on the news.
Walt Disney (DIS - Get Report) shares climbed 1% despite the media company reporting weaker-than-expected revenue in its fourth quarter. However, the world's largest entertainment company did post a 7% increase in profit driven by stronger demand at its resorts.
Monster Beverage (MNST - Get Report) climbed 8% after posting a better-than-expected quarter. The energy drink company earned 84 cents a share, 14 cents above forecasts. Revenue soared 16% to $756.6 million.
DreamWorks Animation (DWA) climbed 7% after the DVD release of children's movie Home helped to boost profits in its recent quarter. The media company posted a surprise profit of 2 cents a share. Analysts had expected a loss of 5 cents a share.
Take-Two Interactive (TTWO - Get Report) added more than 4% after the video game retailer upped its full-year outlook on strong sales of its popular titles such as Grand Theft Auto and NBA 2K. The company expects full-year profit between $1 and $1.15 a share, up from a previous range of 75 cents to $1 a share.
Graphics chipmaker Nvidia (NVDA - Get Report) jumped more than 7% after a better-than-expected quarter. The company earned 46 cents a share, 11 cents above estimates, on revenue of $1.3 billion, above forecasts of $1.18 billion.
Men's Wearhouse (MW) tanked 41% after the suit retailer cut its outlook for the third quarter to between 46 cents and 51 cents a share, down from the 87 cents a share previously forecast. The company blamed the lower guidance on weaker sales at Jos. A. Bank, the retail chain it acquired last year.