U.S. stocks erased losses and rose on Friday, with benchmark indexes extending gains into a fifth week, as investors detoured around a surprisingly disappointing jobs report.
The number of jobs created "was way under what they anticipated, but the unemployment rate countered that," Stephen Carl, head equity trader at the Williams Capital Group, said of the Labor Department's report, which had nonfarm payrolls adding just 142,000 jobs even as the jobless rate declined to 6.1 percent. Economists had expected payroll growth of 225,000 last month.
"This number is already out, and nobody knows what to make of it, so let's trade on the stuff we understand," said JJ Kinahan, chief strategist at TD Ameritrade in Chicago.
"Can we break through 2,000 on the S&P, will (10-year Treasury note) rates challenge 2.5 percent," said of technical and psychological levels viewed as resistance for traders.
The argument could also be made that the disappointing August jobs tally calmed concerns about the Federal Reserve removing stimulus sooner rather than later, with the Fed measuring the health of the jobs market as it tapers bond purchases and mulls the timing of interest-rate hikes.
Boston Federal Reserve Bank President Eric Rosengren bolstered that view on Friday, saying in prepared remarks that the Fed should be patient in cutting stimulus given the "significant" slack in the labor market.
"With respect to the market, the rally in the S&P futures off a big miss still reflects the drug junkie attitude of anything that backs off the Fed is somehow good," emailed Peter Boockvar, chief market analyst at the Lindsey Group.
"For those that are saying the Fed should rush to get out of bond buying, this might take away a little of that argument," said Kinahan.
"You know how the housing numbers are so confusing? So throw the jobs number in the same pile; initial claims, ADP, you usually get some signal, and there was nothing in any of those reports that would make you think we'd get a number this bad," said Kinahan, chief strategist at TD Ameritrade in Chicago.
The one positive aspect of the monthly report is employment gains came in business services, health care and construction, areas were "careers are being created," as opposed to stepping-stone positions like "working at Kmart or tending bar," Kinahan said.