NEW YORK (AP) โ Wall Street remains relatively stable Friday after a report showed that a strong labor market continues to boost the economy, even if it may be too strong.
The S&P 500 rose 0.1% in early trading, but was still on track for its first losing week in the last 10. The Dow Jones Industrial Average was down 4 points, or less than 0.1%, at 9:00 a.m.: 40 a.m. ET and the Nasdaq Composite rose 0.1%.
Treasury yields rose in bond market after jobs report showed U.S. Employers Unexpectedly Accelerated Hiring last month. Workers' average hourly wages also rose, when economists had predicted a fall.
Such strong numbers are good news for workers and should keep the economy going. This is positive for corporate profits, which are one of the main factors that set stock prices.
But Wall Street's concern is that the strong data could also convince investors. Federal Reserve that upward pressure persists on inflation. That, in turn, could mean the Federal Reserve will keep interest rates high longer than expected. This could be bad news for markets that have already rallied strongly on expectations that the Federal Reserve will cut rates deeply this year. Interest rates affect the other big factor that sets stock prices.
The jobs report forced traders to lower expectations that rate cuts would begin in March. They're now betting on a 56% chance of that happening, up from nearly 89% a week ago, according to CME Group data.
The 10-year Treasury yield returned to 4.05%, up from 4.00% late Thursday and from less than 3.80% last week. High rates and yields slow the economy by discouraging borrowing and spending. They also hurt investment prices and increase pressure on the financial system.
This week's pullback in stocks is not a surprise to many on Wall Street, who had been considering their big rally since the fall overblown. Critics say the number of rate cuts traders are betting on by 2024, which is double the three the Federal Reserve has indicated, is unlikely barring a recession.
On Wall Street, Constellation Brands rose 2.5% after the U.S. seller of Corona and Modelo beers reported stronger fourth-quarter earnings than analysts expected.
In foreign stock markets, indices in Europe mostly fell after data showed inflation. rose to 2.9% in December. The rebound after seven consecutive monthly declines fueled debate over when the European Central Bank might cut its own interest rates.
Rates were also lower in much of Asia. Japan's Nikkei 225 was an exception, rising 0.3%. Japanese exporters are betting on a boost from the yen's falling value against other currencies.
The yen has weakened in recent days amid speculation that the Bank of Japan may move slowly in changing its ultra-aggressive interest rate policy following Monday's statement. Great earthquake in central Japan.
