Market Wrap: Stocks End Flat as Fed Rate Hike Eyed

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Jeh Johnson Rings Opening Bell At New York Stock Exchange
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By Lewis Krauskopf

NEW YORK -- U.S. stocks ended little changed Friday, with a rise in financials countered by a slide in utilities and other sectors, as Wall Street took the strong U.S. jobs report as evidence the Federal Reserve will soon raise interest rates.

Since the Fed last week opened the door to a rate increase in December, investors have been looking to economic reports for clues to whether the central bank will take action. Data released Friday showed U.S. non-farm payrolls growth in October was the best since December 2014, while the unemployment rate fell to 5 percent, the lowest since April 2008.

%VIRTUAL-pullquote-While higher interest rates themselves are not a good thing, a vote of confidence in the strength of the economy I think is going to overshadow that over time.%The three major indexes posted higher weekly performances for the sixth week in a row, after posting their best monthly results in four years in October.

The overall market Friday was "holding up well," Peter Jankovskis, co-chief investment officer at OakBrook Investments in Lisle, Illinois, who noted that a Fed action would indicate the economy is healthy enough to tolerate higher rates.

"While higher interest rates themselves are not a good thing, a vote of confidence in the strength of the economy I think is going to overshadow that over time," Jankovskis said.

The Dow Jones industrial average (^DJI) rose 46.9 points, or 0.3 percent, to 17,910.33, the Standard & Poor's 500 index (^GSPC) lost 0.73 points, or 0.03 percent, to 2,099.2 and the Nasdaq composite (^IXIC) added 19.38 points, or 0.4 percent, to 5,147.12.

The S&P financial sector rose 1.1 percent, leading all sectors. Banks tend to benefit from higher borrowing rates, and shares of JPMorgan (JPM), Bank of America (BAC) and Citigroup (C) each climbed at least 3 percent, making them the biggest positive influences on the S&P.

The rate-sensitive utilities sector dropped 3.6 percent, the worst performing group. The S&P consumer staples sector fell 1.1 percent, while the energy group dipped 0.4 percent as crude oil prices were down.

Focus on Rate Increase

"The market is reacting today as if rates will be increased in December," said Ben Halliburton, chief investment officer at Tradition Capital Management in Summit, New Jersey.

"They're rotating money to take advantage of that or cut back where they're not going to be advantageous," Halliburton added.

Alibaba (BABA) fell 2.1 percent to $83.61 after a CNBC report said short-seller Jim Chanos pitched the company as a possible short.

Shares of Disney (DIS) rose 2.4 percent to $115.67 after it reported a higher-than-expected profit.

ZS Pharma (ZSPH) shares jumped 40.6 percent to $89.04 after Britain's AstraZeneca (AZN) agreed to buy the biotech company for $2.7 billion.

Tableau Software (DATA) shares jumped 21.4 percent to $102.44 after higher-than-expected results, with other data analytics stocks also rising.

Declining issues outnumbered advancing ones on the NYSE by 1,931 to 1,186, for a 1.63-to-1 ratio on the downside; on the Nasdaq, 1,726 issues rose and 1,086 fell for a 1.59-to-1 ratio favoring advancers.

The S&P 500 posted 15 new 52-week highs and 9 new lows; the Nasdaq recorded 151 new highs and 70 new lows.

-Charles Mikolajczak and Abhiram Nandakumar contributed reporting.

What to watch Monday:

Earnings Season
These selected companies are scheduled to report quarterly financial results:
  • Dish Network (DISH)
  • Lions Gate Entertainment (LGF)
  • Priceline Group (PCLN)
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