Bond yields rose and stock markets mostly edged higher on Friday after US employment and manufacturing data underscored a strong economy with little wage inflation, but a gloomy outlook from Amazon.com gave investors a pause.
US job growth surged in January, with employers hiring the most workers in 11 months, the Labour Department said, pointing to underlying strength in the economy despite an uncertain outlook that has left the Federal Reserve wary about more interest rate hikes this year.
The employment report showed a tepid gain in hourly earnings, while the ISM “prices paid” index slipped more than expected, the latest data that show a modest US inflationary pace.
Prices in the US futures markets indicate traders see no rate hikes ahead. Short-term futures, in fact, show they remain convinced the US central bank's next move will be a rate cut rather than a hike.
Stocks on Wall Street pared early session gains to close near break-even, while European markets closed a bit higher.
MSCI's gauge of stocks across the globe rose 0.02 per cent and emerging market stocks fell 0.03 per cent.
Earlier in Europe, the pan-European STOXX 600 index closed up 0.21 per cent.
Amazon.com posted record sales and profit during the holiday season, but its shares fell 5.38 per cent after its quarterly sales forecast fell short of Wall Street estimates.
The e-commerce giant was easily the biggest drag on the Nasdaq and S&P 500, while consumer discretionary stocks fell 1.77 per cent, the biggest losing sector on the benchmark index.
Amazon's results suggested US consumers may be spending less, a potential sign of a slowing economy, said Cliff Hodge, director of investments at Cornerstone Wealth.
“They've been in a very strong environment, but you can see things start to slow down a little bit,” Hodge said.
The Dow Jones Industrial Average rose 64.22 points, or 0.26 per cent, to 25,063.89. The S&P 500 gained 2.43 points, or 0.09 per cent, to 2,706.53 and the Nasdaq Composite dropped 17.87 points, or 0.25 per cent, to 7,263.87.
While fourth-quarter results have mostly beaten expectations, there have been 27 negative earnings pre-announcements issued by companies in the S&P 500 for the first quarter, compared with nine positive, Refinitiv data show.
The negative-to-positive ratio is now 3.0, which is above the long-term average of 2.7 and above the prior four-quarter average of 1.5, Refinitiv said.
The estimated first-quarter earnings growth rate for the S&P 500 companies has declined to 0.7 per cent from 5.3 per cent on January 1, Refinitiv said.
The data suggests slower US growth and adds to a growing list of economic readings indicating slowing global growth. The Caixin/ Markit index of Chinese manufacturing fell to its lowest since February 2016.
Oil prices rose, lifted by signs the US and China could soon settle their protracted trade dispute, while producer cuts and US sanctions on Venezuelan exports helped tighten supply.
International Brent crude oil futures settled up $1.91 to $62.75 per barrel. US West Texas Intermediate (WTI) futures rose $1.47 to settle at $55.26.
The dollar index rose 0.01 per cent, with the euro up 0.13 per cent to $1.159. The Japanese yen weakened 0.56 per cent versus the greenback at 109.48 per dollar.
US gold futures settled down 0.2 per cent to $1,322.10. Benchmark 10-year US Treasury notes fell 15/32 in price to push their yield up to 2.6896 per cent.
“The big news of the week is the tone of the Fed has turned a bit dovish. The outlook for a tightening phase has come to an end,” said Minh Trang, senior currency trader at Silicon Valley Bank in Santa Clara, California.