Stock market today: Wall Street wavers after early rally on data showing labor market is

Stocks are wavering on Wall Street in midday trading Friday after the government reported that U.S. job growth increased at a healthy, but more moderate pace last month.

The major indexes had been up as much as 0.8% in the early going following the release of the report, which supports investors’ hopes that the Federal Reserve will hold off on raising interest rates again in its bid to lower inflation. They gave back most of their early gains as bond yields began ticking higher.

The S&P 500 was down 0.1%. The benchmark index is coming off its first monthly loss since February, but is on pace for its second straight weekly gain.

The Dow Jones Industrial Average was up 16 points, or less than 0.01%, to 34,736 as of 11:54 a.m. Eastern. The Nasdaq composite fell 0.3%.

The Labor Department reported Friday that employers added a solid 187,000 jobs in August. The job growth marked an increase from July’s revised gain of 157,000, but still pointed to a moderating pace of hiring compared with earlier this year. From June through August, the economy added 449,000 jobs, the lowest three-month total in three years.

The report also showed that the unemployment rate rose from 3.5% to 3.8%, the highest level since February 2022, though still low by historical standards.

Wall Street welcomed the latest monthly labor market snapshot, as it roots for the economy to show signs of lower inflation and cooling job growth so that the Fed will be able to ease up on its rate hike campaign.

“Today’s employment report will add to recent data which indicates the Fed can pause on raising interest rates,” said Steve Wyett, chief investment officer of BOK Financial.

The strong job market, along with consumer spending, has so far helped thwart a recession that analysts expected at some point in 2023. But they also made the central bank’s task of taming inflation more difficult by fueling wage and price increases.

Market jitters over the possibility that the Fed might have to keep interest rates higher for longer — following reports showing the U.S. economy remains remarkably resilient — led to the market’s pullback in August after what had been a banner year.

But this week, reports showing job openings fell to the lowest level since March 2021, consumer confidence tumbled in August and a measure of inflation closely tracked by the Fed remained low in July. The reports have bolstered the view on Wall Street that the Fed may hold rates steady at its next policy meeting in September.

“From a data-dependent Fed perspective, the economic data we have seen in August in conjunction with today’s jobs report certainly reinforces the idea that we have seen the last rate hike during this cycle,” said Charlie Ripley, senior investment strategist for Allianz Investment Management.

The central bank has raised its main interest rate aggressively since 2022 to the highest level since 2001. The goal has been to rein inflation back to the Fed’s target of 2%. The Fed has maintained that it is ready to keep raising interest rates if it has to, but will base its next moves on the latest economic data.

Bond yields were initially mixed, but then mostly headed higher. The yield on the 2-year Treasury, which tracks expectations for the Fed, rose to 4.88% from 4.87% late Thursday. The yield on the 10-year Treasury, which influences interest rates on mortgages and other consumer loans, rose to 4.19% from 4.11%.

Banks accounted for a big share of the gains among S&P 500 companies Friday. Wells Fargo added 1.1%.

Rising oil prices helped push energy stocks higher. Exxon Mobil rose 1.1% and Chevron was up 1.4%.

The price of U.S. crude oil climbed 1.6%, extending its weekly gain to 6.4%. The increase comes as production cuts by major producers continue to prop up the market. Many industry analysts are expecting to Saudi Arabia to extend those cuts through October.

Earlier this month, Saudi Arabia said it would extend its unilateral production cut of 1 million barrels of oil a day through the end of September in its effort to boost flagging energy prices. The Saudi cut of 1 million barrels per day, which began in July, came as the other OPEC+ producers have agreed to extend earlier production cuts through next year.

Since Saudi Arabia’s July cut — which amounts to about 10% of its daily output — oil prices are up nearly 20%.

Communications stocks were among the market’s laggards. Disney dropped 2.7% after the entertainment giant pulled its programming, including ESPN, from Charter Communication’s Spectrum TV after the companies failed to come to terms on a new distribution deal. Charter was down 3.1%.

Elsewhere in the market, traders had their eye on the latest batch of company earnings reports.

Broadcom reported third-quarter earnings and revenue growth, but its shares fell 5.5% amid worries over slowing momentum in its storage and broadband businesses.

Dell jumped 23.2% after its fiscal second-quarter earnings and revenue topped Wall Street estimates. Nutanix gained 14.2% after reporting better-than-expected results.

Walgreens Boots Alliance fell 5% after the company announced that CEO Rosalind Brewer was stepping down at the end of the month and that Ginger Graham would take over as interim CEO.

Stocks in Europe were mostly lower. Markets in Asia ended mixed.

Trading was halted in Hong Kong because of an approaching typhoon. Schools and businesses were shut as an official warning was issued about Super Typhoon Saola. Hundreds of flights were canceled or delayed.

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Yuri Kageyama in Tokyo and Matt Ott in Silver Spring, Md., contributed.