U.S. stock finished mixed on Friday, with Wall Street not certain how much credence to give a dismal December-payrolls report, given just how far afield it was from expectations as well as other economic reports that have signaled an improving labor market.
"I'm stunned by it, it's just not supportive of the trend we've seen," said John Lynch, regional chief investment officer at Wells Fargo Private Bank, of the government's tally of an additional 74,000 to nonfarm payrolls last month, far below estimates of about 200,000, with the unemployment rate falling to 6.7 percent, as the labor force participation rate fell to its lowest in more than three decades.
"The market reaction is how everyone is feeling, it's such an outlier, it contradicts every other report we've seen," said JJ Kinahan, chief strategist at TD Ameritrade. That said, "there are a few things in there to be concerned about, primarily the participation rate, and that the jobs created were primarily in retail. And health care jobs were lost, that's an area where we've seen good growth," Kinahan said.
Wall Street's focus is about to do an about face, as "we have so many earnings, especially financials, coming out next week, so Monday morning, that will the the topic. Financials will be the bellwether for how the earnings season is going to go," said Kinahan of results expected in the week ahead from major banks, including JPMorgan Chase, Wells Fargo, Bank of America, Citigroup.
Target fell after the discount retailer hiked its estimate of customers affected by the recent mass data breach to up to 110 million, saying sales had been "meaningfully weaker than expected." Alcoa declined sharply after the aluminum producer reported fourth-quarter profit below expectations. Gap gained after the retailer said its yearly profit might hit the higher end of its guidance. Abercrombie & Fitch jumped after upping its full-year earnings outlook.
After trading in a 108-point range on either side of neutral, the Dow Jones Industrial Average ended in the red, down 7.71 points at 16,437.05, leaving it down 0.2 percent for the week and 0.8 percent for the year. Chevron fronted blue-chip losses that included 15 of the Dow's 30 components. The oil producer fell 1.9 percent after it said profit would drop 31 percent from a year ago in the fourth quarter.
The S&P 500 gained 4.24 points, or 0.2 percent, to 1,842.37, up 0.6 percent for the week and down 0.3 percent for the year.Utilities and telecommunications performed the best and financials were the laggards among its 10 major industry groups.
The Nasdaq rose 18.47 points, or 0.4 percent, to 4,174.66, up 1 percent for the week and down less than 01 percent for the year.
For every stock that fell, more than two gained on the New York Stock Exchange, where 669 million shares traded. Composite volume topped 3.3 billion.
"Maybe it was the weather, maybe it was the governor of New Jersey, but something caused this to happen and I would pay close attention to next month's revision for possible clues," offered Kevin Giddis, a managing director and fixed-income analyst at Raymond James, of Friday's jobs data, which left equities wavering but prompted a decisive drop in borrowing costs, at least in those reflected in the 10-year Treasury yield.
On the New York Mercantile Exchange, crude futures climbed $1.06 to $92.72 a barrel, bouncing back from the prior day's settlement, which had oil futures at an eight-month low. Gold futures rose $17.50 to $1,246.90 an ounce.
"The tapering process is going to become more of a parlor game," said Lynch at Wells Fargo, referring to the Fed's recent decision to start cutting its monthly bond purchases, with improvement in the labor market cited as key to Fed policy moves. Lynch added.
After a speech to the Indiana Bankers Association Friday afternoon, Federal Reserve Bank of St. Louis President James Bullard said the central bank was unlikely to react to one month's jobs report, and that the Fed was likely to continue to taper, a process that began this month as the Fed cut to $75 billion its monthly bond purchases.
Another economic report on Friday from the Commerce Department had wholesale inventories rising 0.5 percent in November to $516.4 billion.
President Barack Obama nominated three officials to the Fed's board of governors on Friday, including former Bank of Israel governor Stanley Fischer as vice chair.
On Thursday, stocks finished little changed with investors unwilling to place big bets ahead of Friday's employment report.
—By CNBC's Kate Gibson
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