U.S. stocks halted a three-day advance after a volatile Friday session that saw equities swerve between modest gains and losses as investors contended with data pointing to a robust labor market. 

The S&P 500 still notched a weekly gain that took the index to its highest level since August. The Nasdaq 100 also scored a weekly advance, despite heavy selling after Apple Inc., Alphabet Inc. and Amazon. com Inc. reported disappointing results Thursday. Friday’s session capped a hectic week that brought a raft of corporate earnings, economic data and a Federal Reserve policy decision.

Yields on Treasuries spiked higher after a surprisingly strong jobs report that should give the Fed room to remain aggressive if inflation stays elevated. The two-year yield jumped about 19 basis points after touching a low for the year earlier in the week. 

“We are concerned that on the back of this kind of jobs report, it definitely holds the Fed to a higher-for-longer path,” said Lisa Erickson, senior vice president and head of public markets group at U.S. Bank Wealth Management. “There are of course other data points that are going to come before the next meeting, but it certainly puts a placeholder that labor market continues to run some risk of being extremely tight.”

Trading on swaps markets indicated expectations that fed funds rates will almost hit 5 per cent, up by almost 10 basis points on the day. A strong reading on the American economy’s services sector also bolstered concern that growth hadn’t sufficiently cooled to temper price gains. A dollar index rose the most on Friday since late September. 

Geopolitical tensions simmered in the background, with the Biden administration postponing Secretary of State Antony Blinken’s upcoming trip to Beijing after detecting a Chinese surveillance balloon over sensitive nuclear sites in Montana, two officials said.

Here’s what Wall Street said about the bewildering jobs report:

• Jeffrey Rosenberg, a senior portfolio manager at BlackRock Inc.:
  • “This is a big pushback to the slowing. This is a reminder of what Powell tried to say to the market — though the market wasn’t listening — that their main concern is they’re not yet seeing the impact of their tightening in the labor markets.”
• John Leiper, chief investment officer at Titan Asset Management:
  • “There is a huge disparity between market pricing and the commentary coming from central banks. Yes, you could make the case that Jerome Powell was a little more dovish than expected, but he was very clear that his intention is to keep rates higher for longer until the job is done, and that simply isn’t the case yet. Today’s employment data might catalyze a reversion in this apparent dichotomy.”
• Ronald Temple, chief market strategist at Lazard:
  • “The clear takeaway for the Fed should be that financial conditions remain too loose to ensure inflation will return to the 2 per cent target. While wage gains show few signs of accelerating, persistent labor market tightness combined with the loss of real wages since the pandemic is highly likely to lead to increased wage demands over time.”

Some of the main moves in markets:

Stocks

• The S&P 500 fell 1 per cent as of 4 p.m. New York time
• The Nasdaq 100 fell 1.8 per cent
• The Dow Jones Industrial Average fell 0.4 per cent
• The MSCI World index rose 1.2 per cent

Currencies

• The Bloomberg Dollar Spot Index rose 1.2 per cent
• The euro fell 1 per cent to US$1.0796
• The British pound fell 1.4 per cent to US$1.2051
• The Japanese yen fell 1.9 per cent to 131.14 per dollar

Cryptocurrencies

• Bitcoin fell 0.5 per cent to US$23,338.22
• Ether rose 1.2 per cent to US$1,656.1

Bonds

• The yield on 10-year Treasuries advanced 14 basis points to 3.53 per cent
• Germany’s 10-year yield advanced 11 basis points to 2.19 per cent
• Britain’s 10-year yield advanced five basis points to 3.06 per cent

Commodities

• West Texas Intermediate crude fell 3.4 per cent to US$73.27 a barrel
• Gold futures fell 2.7 per cent to US$1,877.90 an ounce