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.