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Canada’s main stock index fell on Friday, including declines for financials and technology, as investors weighed U.S. and Canadian jobs data that could help determine the pace of central bank interest rate hikes. U.S. stocks fell, although they recovered from their lowest levels - a move some strategists took as a bullish signal.

The Labor Department’s jobs report showed U.S. nonfarm payrolls rose by 263,000, above expectations of 200,000 and wage growth accelerated even as recession concerns increase.

The U.S. unemployment rate remained unchanged, as expected, at 3.7%.

“Wage growth has been in an uptrend since August,” said Brian Jacobsen, senior investment strategist at Allspring Global Investment in Menomonee Falls, Wisconsin.

“We will have to see that trend reverse for the Fed to be comfortable with a pause. Until then, they’ll continue to taper towards a pause.”

Investors have been looking for signs of weakness in the labour market, especially wages, as a precursor to faster cooling of inflation that will enable the Fed to slow and eventually stop its current rate hike cycle.

Stocks had rallied earlier in the week after Fed Chair Jerome Powell’s comments on scaling back interest rates hikes as early as December.

The Dow Jones Industrial Average rose 34.87 points, or 0.1%, to 34,429.88, the S&P 500 lost 4.87 points, or 0.12%, to 4,071.7 and the Nasdaq Composite dropped 20.95 points, or 0.18%, to 11,461.50.

Still, equities ended the session off their lowest levels of the day that saw each of the major indexes tumble at least 1%, with the Dow managing a slight gain.

“If anything, I am actually encouraged by how the market is clawing its way back from the level we were at today. It is another indication the market is looking for at least a seasonal December rally,” said Sam Stovall, chief investment strategist at CFRA in New York.

“The market is beginning to look across the valley and say, ‘OK, a year from now the Fed will likely be on hold and considering cutting rates.’”

The rate-setting Federal Open Market Committee meets on Dec. 13-14, the final meeting in a volatile year that saw the central bank attempt to stifle the fastest rate of inflation since the 1980s with record interest rates increases.

The major averages notched a second straight week of gains, with the S&P 500 climbing 1.13%, the Dow gaining 0.24% and the Nasdaq rising 2.1%.

Growth and technology companies such as Apple Inc, down 0.34%, and Amazon, off 1.43%, were pressured by concerns over rising rates but pared declines as U.S. Treasury yields eased throughout the day off earlier highs. The S&P 500 growth index declined 0.29% while technology shares were among the worst performing among the 11 major S&P 500 sectors with a fall of 0.55%.

Ford Motor Co declined 1.56% on lower vehicle sales in November, while DoorDash Inc 3.38% shed after RBC downgraded the food delivery firm’s stock.

Advancing issues outnumbered declining ones on the NYSE by a 1.15-to-1 ratio; on Nasdaq, a 1.35-to-1 ratio favored advancers. The S&P 500 posted 20 new 52-week highs and no new lows; the Nasdaq Composite recorded 86 new highs and 92 new lows.

The Toronto Stock Exchange’s S&P/TSX composite index ended down 39.79 points, or 0.2%, at 20,485.66, after posting on Thursday its highest closing level in nearly six months.

For the week, the TSX was up 0.5%.

Canada added 10,100 jobs in November, broadly in line with forecasts, while the jobless rate fell to 5.1%.

Money markets expect the Bank of Canada to raise interest rates by 25 basis points when it makes a policy decision on Wednesday, with a roughly 25% chance of a larger move.

“We’re still in a mood where the market looks at good news as bad, because the data still shows that the Bank of Canada can still be aggressive,” said Greg Taylor, a portfolio manager at Purpose Investments.

This week was a cocktail of economic data iced with mixed bank earnings, as markets enter into the holiday season.

Canadian Imperial Bank of Commerce (CIBC) fell 0.7%, extending its decline from the previous day when it reported quarterly results that missed estimates.

The lender said it would appeal a New York court’s ruling in a lawsuit brought against the bank by an entity of U.S. private equity firm Cerberus Capital Management.

The heavily weighted TSX financials sector fell 0.4%, while technology gave back some of its recent gains, ending 0.8% lower.

Helping to cap losses for the index was a gain of 4.9% for the health-care sector, as shares of cannabis producers climbed.

Reuters

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