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.
The China Securities Regulatory Commission also decided to suspend the circuit-breaker system that went into effect on January 1. Chinese markets have triggered the mechanism twice in just four days.
FedEx (FDX) shares added 1.4% after the delivery company received unconditional approval from European regulators for its deal to buy TNT Express. The company had received approval from U.S. regulators in November.
American Eagle Outfitters (AEO) plunged 12% after warning sales could miss estimates as a warmer winter limited demand for seasonal apparel. The teen retailer forecast same-store sales to rise 4% so far this quarter, below estimates of 4.7% growth.
Urban Outfitters (URBN) was slightly lower after a disappointing holiday-shopping period. The retailer reported a 2% decline in same-store sales for the two months to end last year, while total company sales were flat. The company said it was optimistic for improvement in spring.
Apple (AAPL) suppliers were sharply lower on fears the tech giant has scaled back iPhone production on weaker demand and inventory buildup. Semiconductor supplier Qorvo (QRVO) tumbled 9% after lowering its third-quarter outlook due to softer sales of its mobile products. Fellow suppliers such as Cirrus Logic (CRUS) , Avago (AVGO) , and Skyworks (SWKS) were also lower.
The Container Store (TCS) tumbled 20% after swinging to a quarterly loss. The retailer reported a quarterly loss of 4 cents a share compared to profit of 13 cents a share a year earlier after higher promotional spending ate into profit. Same-store sales rose just 0.5% over the quarter.
Bed, Bath & Beyond (BBBY) added 1% even as quarterly profit fell 21%, driven by a sales decline at existing stores. However, the homewares retailer did see a strong online performance with comparable digital sales up 25% from a year earlier.