A stock rally quickly faded Friday as both China and the possibility of a March rate hike dampened enthusiasm over a huge increase in U.S. jobs.
U.S. stocks climbed after six days of declines. The S&P 500 added 0.2%, the Dow Jones Industrial Average was up 0.29%, and the Nasdaq rose 0.33%.
A blowout number of jobs were added to U.S. nonfarm payrolls in December. Last month, 292,000 jobs were added to the economy, well over economists' expectations for 200,000 jobs. The unemployment rate was unchanged at 5%, as expected.
Expectations for Federal Reserve rate hikes this year shifted after the better-than-expected jobs report. Fed funds futures suggest a 52% change of a rate hike as soon as March, above previous estimates of around 40%. Previous odds bet on a rate hike no sooner than June.
Any certainty of a March rate hike is still too far off, though, with too many factors that could crop up to push chances lower.
"There are too many external factors that could prevent the US economy from moving ahead at full speed even if there is enough fuel in the tank," Sharon Stark, managing director and fixed income strategist at D.A. Davidson, wrote in a note. "Potential bottlenecks remain from China weakness and policy stumbles, volatile commodities prices, and lack (real or perceived) of liquidity, to name a few."
China's Shanghai Composite closed 2% higher in a brief rally after a largely dismal week. Markets rebounded on Friday after Chinese officials boosted the yuan midpoint rate for the first time in nine days. However, the index was still down 10% for the week after devaluation of the yuan sparked concerns over the health of the Chinese economy.