Wall Street wavers after jobs data, hopes for China rebound

Traders work on the floor at the New York Stock Exchange in New York, Tuesday, Oct. 4, 2022. Stocks are opening lower on Wall Street, Thursday, Nov. 3, and Treasury yields are again bumping up against multiyear highs a day after the Federal Reserve indicated that its fight against inflation is far from over. (AP Photo/Seth Wenig, File)

People walk past the New York Stock Exchange on Wednesday, June 29, 2022 in New York. Stocks are opening lower across the board on Wall Street, Tuesday, July 5, and crude oil prices are dropping again. Treasury yields also fell as traders continued to worry about the state of the economy (AP Photo/Julia Nikhinson)

NEW YORK (AP) — Stocks wavered Friday as Wall Street weighs how to read the latest data on the U.S. jobs market and hopes that the world's second-largest economy may be set for a boost.

The S&P 500 was 0.1% higher in afternoon trading after settling down from gains as high as 2.1% earlier. The big swing for the index follows the U.S. government's report showing the unemployment rate ticked higher in October and employers added fewer jobs than they had a month earlier. Perhaps even more key for markets was that average raises for workers also slowed last month.

The data offers some hope that the Federal Reserve’s intentional efforts to weaken the jobs market may be starting to take effect and may help lower the nation's high inflation. The slowdown, though, was more modest than economists expected. And it changed very few minds, if any, on Wall Street about what’s going to happen next: The Fed will keep hiking interest rates toward levels rarely seen this millennium, moves that will further brake the economy and drag on prices for stocks and other investments.

While Wall Street was chewing over the jobs report, markets around the world bounced higher amid continued speculation that China may relax its zero-COVID strategy and invigorate what's long been a major source of growth for the global economy.

The Dow Jones Industrial Average was up 31 points, or 0.1%, at 32,038, as of 12:15 p.m. Eastern time, and the Nasdaq composite was 0.1% lower. The Russell 2000, which tracks small company stocks, fell 0.2%

Fed Chair Jerome Powell earlier this week called out a still-hot jobs market as one of reasons the central bank may ultimately have to raise rates higher than earlier thought. That heightened expectations for Friday's jobs report, but the data was mixed enough that Wall Street could not agree on its takeaway.

Some analysts pointed to the slight increase in the unemployment rate to 3.7% during October. That raised the possibility that September's 3.5% rate may prove to be the bottom. Big technology companies like Amazon have recently announced freezes to hiring or even layoffs to stay in step with what they see as a weakening economy. That could keep the economy out of a feared “wage-price spiral” where big jumps in wages and a strong job market trigger a vicious cycle that forces inflation higher.

Others, though, focused on the still-hot jobs market where hiring continues to top expectations. If anything, Friday's jobs data likely means “Fed officials are going to have to step on the brakes even harder to slow this economy and bring inflation under control,” according to Russell Price, Ameriprise chief economist.

Several investors and banks raised their expectations Friday for how high the Fed will ultimately take short-term interest rates next year, with many eyeing something above 5% after they began this year at virtually zero.

At fund behemoth Vanguard, the investment strategy group said all the data together offers “nothing to change Vanguard's Fed expectations” and only increases the focus on next week's update for how bad inflation was across the country in October.

Markets around the world wobbled in the minutes immediately following the release of the U.S. jobs data, which is one of the most anticipated reports on Wall Street every month. The yield on the two-year Treasury, which tends to track expectations for action by the Fed, jerked up and down a few times before eventually easing.

Markets had been higher earlier in the day, in part on hopes that China may soon relax anti-COVID policies that have sometimes caused entire cities to be locked down for weeks.

Such a move could give a big boost to the global economy when aggressive interest-rate hikes by central banks from the Americas to New Zealand are raising worries about recessions around the world.

Stocks in Hong Kong surged 5.4% Friday, while stocks in Shanghai jumped 2.4%. Both markets finished the week with strong gains.

The price of copper also climbed 7.2%. A stronger Chinese economy would devour more raw materials, and shares of miner Freeport-McMoRan soared 9.5% for the biggest gain in the S&P 500.

Two casino companies that get much of their revenue from the gambling center of Macao on the southern coast of China were also among Wall Street's stronger stocks. Las Vegas Sands climbed 4.1%, and Wynn Resorts added 4%.

Stocks also rallied across Europe. France's CAC 40 rose 2.4%, and Germany's DAX returned 2%.

The yield on the two-year Treasury fell to 4.71% from 4.72% late Thursday. The 10-year yield, which helps dictate rates for mortgages and other loans, edged higher to 4.16% from 4.15%.

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AP Business Writers Yuri Kageyama and Matt Ott contributed.