Stocks are little changed as investors assess strong jobs report: Live updates

Stocks hovered near the flatline Friday as investors assessed a strong jobs report that left them torn between hopes for a resilient economy and expectations for Federal Reserve rate cuts in the new year.

The Dow Jones Industrial Average added 26 points, or 0.1%. The S&P 500 was flat and the Nasdaq Composite inched down 0.1%.

Weighing on sentiment was a pop in yields after November’s nonfarm payrolls report showed an unexpected drop in the unemployment rate, with the yield on the 10-year Treasury last up by 10 basis points at 4.23%. (One basis point equals 0.01%.)

The jobless rate fell to 3.7% in November from 3.9% the prior month. It was expected to remain the same. The economy added 199,000 jobs, slightly ahead of the 190,000 estimate from Dow Jones and well ahead the 150,000 jobs added in October.

The data first raised concerns the economy was running too hot for inflation to cool enough for the Fed to start retreating from its high-rates policy. Some traders expect the Fed to start cutting rates as early as March.

On the other hand, the monthly jobs report could also support the notion that the Fed is guiding the U.S. economy toward a soft landing — a steady economic recovery amid falling inflation. Average hourly earnings, seen as a leading indicator of inflation, rose about as expected in November as the economy added more jobs than the prior month.

“Those arguing for a soft-landing have the evidence to support them today, the only caveat being the economy may not be coming in for a landing at all, as it is still up in the air flying high,” said Christopher Rupkey, chief economist at FwdBonds. “Time will tell if this extended growth and moderate jobs creation reignite inflation pressures that force Fed officials to keep rates higher for longer next year.

The Fed will deliver its latest policy decision Wednesday.

Stocks have struggled this week, with the Dow losing 0.4% and the S&P 500 falling 0.3% — putting both benchmarks on track to break their five-week win streak. The Nasdaq has fallen 0.1%.

In other news, Carrier Global shares jumped more than 5% on news that it’s selling a business unit to Honeywell. The industrial stock lost 2%. First Solar popped 5% on an upgrade from Morgan Stanley.

Correction: A previous version misstated the S&P 500’s week-to-date performance.