Stocks held mixed on Friday after U.S. jobs gains in November solidified the chances of an interest rate hike in December.
The S&P 500 rose 0.19%, the Dow Jones Industrial Average slid 0.07%, and the Nasdaq added 0.21%. The Dow was on track for weekly gains for the fourth week in a row, while the Nasdaq was set to post a weekly loss for the first time in a month.
The U.S. economy added 178,000 jobs in November, according to the Labor Department, just slightly higher than an anticipated increase of 174,000. The U.S. unemployment rate fell to 4.6% from 4.9%, hitting its lowest level since August 2007. Average wages fell 0.1% after reaching their best level since July a month earlier.
The U.S. jobs report makes the chances of a December rate hike all the more likely. Federal Reserve members have recently telegraphed a December increase, arguing that the case for policy normalization had strengthened.
The likelihood of a rate hike when the Fed meets Dec.13-14 currently sits at 95%, according to CME Group fed funds futures. Most are anticipating an increase of 25 basis points, but some, including Ameriprise senior economist Russell Price, argue there is a slim chance the recent run of positive economic data could push the Fed to hike by 50 basis points.
"This would likely come as a short-term shock to markets, but given the rise in market rates that has already occurred and the strong position of the U.S. banking system, markets would come to see the hike as appropriate rather quickly," Russell wrote in a note.
The Dow scored a new record close on Thursday as banking and energy stocks gave the blue-chip index a boost. A tech selloff pulled the S&P 500 and Nasdaq lower.
Banks reversed course on Friday, giving back some of the big gains achieved over the past few days. Goldman Sachs (GS) and JPMorgan (JPM) weighed on the Dow. Wells Fargo (WFC) , Citigroup (C) , and Morgan Stanley (MS) were also lower.
Crude oil prices stabilized after a two-day rally. Crude had rocketed to six-week highs on Thursday as traders cheered a production freeze agreement among major oil-producing nations. The Organization of Petroleum Exporting Countries reached a deal on Wednesday to trim production by 1.2 million barrels a day, its first cut since 2008.
West Texas Intermediate crude was up 0.5% to $51.28 a barrel on Friday morning.
Starbucks (SBUX) fell 3% after CEO Howard Schultz announced his departure. Schultz will resign from his position, effective April 3, and will join the board as executive chairman to focus on big-picture initiatives. Chief Operating Officer Kevin Johnson will assume the CEO position come April.
Big Lots (BIG) moved slightly higher after raising its anticipated full-year earnings forecast. The retailer expects adjusted earnings between $3.55 and $3.60 a share, up from its previous range of $3.45 to $3.55 a share. Analysts forecast full-year earnings of $3.53 a share. Its same-store sales target of 1% to 2% growth was unchanged.
Smith & Wesson (SWHC) tumbled 8% after issuing weaker guidance for its current quarter than expected. Adjusted earnings for its recent quarter did top analysts' estimates, though, with per-share profit of 68 cents coming in 12 cents higher than forecast.
Pandora (P) jumped on Friday morning on reports the company is considering selling itself. Sources told CNBC that Pandora was open to negotiations with SiriusXM (SIRI) , which had previously made a play for the music-streaming service.
Teleflex (TFX) was up 1% after agreeing to acquire Vascular Solutions in a deal worth $1 billion. The specialty medical device marker agreed to pay $56 for each Vascular share, a 1.6% premium to its Thursday close. The deal is set to close in the first half of next year.
Allergan (AGN) climbed more than 2% after settling a lawsuit with Zydus Pharmaceuticals and Cadila Healthcare. The patent case involved Delzicol, a treatment for ulcerative colitis. Zydus and Cadila could sell a generic version of Delzicol come March 2020 if the Food and Drugs Administration approves their copy.