Wall Street’s main indexes have slipped after a jobs report pointing to a resilient US labour market dampened hopes that the Federal Reserve would cut interest rates by early next year while gains in energy shares helped limit declines.
The Labor Department’s report showed non-farm payrolls increased by 199,000 jobs in November, compared with an estimated increase of 180,000.
The unemployment rate slipped to 3.7 per cent, against expectations that it would remain steady at 3.9 per cent, while average earnings rose 0.4 per cent on a monthly basis compared with forecasts of 0.3 per cent growth.
Bets that the Fed will deliver a rate cut in March eased to 46.7 per cent after the report from 57.7 per cent, according to the CME Group’s FedWatch tool.
“There’s been increasing pressure around the Fed to pivot to a more accommodative message, and these numbers are going to give the Fed cover to continue that very hawkish approach,” said Tony Roth, chief investment officer at Wilmington Trust in Philadelphia.
“The market has been priced for perfection in terms of that soft landing. (But) that is (not) going to happen in a direct line, it is going to be bumpy.”
The payrolls report is in contrast to a slew of data this week that indicated a softening labour market and fuelled bets that the US central bank was at the end of its tightening campaign and could pivot to lower rates soon.
The tech-heavy Nasdaq underperformed peers as Alphabet slipped 1.7 per cent after an artificial intelligence-driven rally in the prior session.
Other megacap stocks were mixed, with Nvidia up 1.1 per cent.
Six of the 11 S&P 500 sector indexes traded in the red.
Energy stocks limited declines, rising 1.0 per cent as crude prices gained.
Optimism around peak interest rates and upbeat quarterly earnings led to a strong rebound in equities towards the end of the year, while the 10-year Treasury yield has plunged from its October peak of about 5.0 per cent.
The S&P 500 has risen 19 per cent so far in 2023 and is within close range of its highest intraday level of the year hit in July.
In early trading, the Dow Jones Industrial Average was down 19.42 points, or 0.05 per cent, at 36,097.96, the S&P 500 was down 6.04 points, or 0.13 per cent, at 4,579.55, and the Nasdaq Composite was down 48.60 points, or 0.34 per cent, at 14,291.39.
Honeywell dipped 1.9 per cent after the industrial firm said it would buy air conditioner maker Carrier Global’s security business for $US4.95 billion ($A7.52 billion).
Carrier’s shares rose 5.5 per cent.
Declining issues outnumbered advancers for a 1.08-to-1 ratio on the NYSE and for a 1.02-to-1 ratio on the Nasdaq.
The S&P index recorded 10 new 52-week highs and no new lows while the Nasdaq recorded 29 new highs and 25 new lows.