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Stocks fluctuated Friday, as investors digested mixed data on the labor market that showed signs the Federal Reserve’s efforts to cool the economy might be having an effect, even as hiring remained robust.

The S&P 500 seesawed between small gains and losses in afternoon trading Friday, retreating from a more sizable rally earlier in the day. The moves came after the index lost ground every day for the past four days, erasing 4.6% of the its value for the week through Thursday.

The sell-off accelerated Wednesday after Jerome Powell, chair of the Federal Reserve, dashed investors’ hopes that the central bank would soon end its campaign of raising interesting rates, which is aimed at slowing the economy and easing inflation.

Against that backdrop, the latest jobs data, which showed the pace of job growth slowing last month, offered investors some reprieve Friday morning. The unemployment rate rose to 3.7% in October, still very low but above the rate expected before the numbers were released.

Lower unemployment is typically welcomed by investors as a sign of economic strength, but as the Fed attempts to tame stubbornly high inflation, a robust labor market highlights the need to slow the economy further by raising interest rates, which in turn increases costs for companies. That’s why somewhat higher unemployment, which may be an early sign that the Fed’s rate increases are taking hold, could be seen as a welcome development by investors at this particular moment.

“The jobs report was stronger than we would like but probably tame enough to keep the Fed on track to be able slow the pace of rate increases in the coming months,” said Matt Peron, director of research at Janus Henderson Investors. He added that a “relief rally could be in store as it could have been worse.”

Still, evidence Friday of vigorous hiring activity and rising wages added to the reasons for the Fed to continue raising interest rates aggressively.

The Fed is in the midst of a communication challenge, said Tiffany Wilding, an economist at asset manager Pimco. Investors complained of whiplash after a seemingly cautious Fed statement Wednesday — which acknowledged that rate increases take time to work through the economy and was interpreted as setting the stage for the Fed to slow its pace of rate increases — was followed by more hawkish comments at a news conference by Powell, who said it was “very premature” to talk about pausing rate increases.

The Fed faces a difficult path as it tries to determine when it can safely let up on rate increases, which take time to work through the economy, without signaling that its determination to reduce inflation has waned, which could prompt investors to start expecting rate cuts, pushing up asset prices and undoing the Fed’s work prematurely.

“They realize that monetary policy works through lags. They realize they have done a lot in a short period of time. And they realize they haven’t seen much effect,” Wilding said. “They have a conundrum.”

The yields on U.S. government bonds held steady, after big jumps in recent days on expectations of aggressive Fed rate increases. Short-term rates remain above long-term rates, producing a so-called inverted yield curve, which many on Wall Street consider a reliable indicator of impending economic stress.

Friday’s numbers about hiring in October could help set the direction for markets heading into next week when investors will receive fresh data on inflation in the U.S. economy. However, analysts cautioned that with over a month until the Fed’s next meeting and with more data due to be released between now and then, it’s unlikely the October jobs report will have too much bearing on what the Fed will do in December.

Thomas Barkin, president of the Federal Reserve Bank of Richmond, Virginia, said on CNBC after the report Friday that the Fed had its foot on the brakes of the economy and could “act a little more deliberatively,” with a slower but longer and “potentially a higher” road ahead for rate increases.

Investors have become increasingly worried that as interest rates rise quickly, the financial markets are becoming strained, and that the likelihood the United States could slip into recession has increased.

Susan Collins, president of the Federal Reserve Bank of Boston, said she remained hopeful that the central bank could slow the economy down without a significant economic slowdown.

“As policy becomes more restrictive, the risks of over-tightening rise,” she said in the text of a speech Friday. “These risks must be thoughtfully weighed against the risks of moving too slowly and allowing higher inflation expectations to become entrenched.”

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