The Nasdaq Composite rose in choppy trading on Friday as investors reacted to a stronger-than-expected jobs report that will likely keep the Federal Reserve on track for its aggressive rate hikes.
The Nasdaq gained 0.12% to settle at 11,635.31, while the S&P 500 dipped 0.08% to 3,899.38. The Dow Jones Industrial Average closed down 46.40 points, or 0.15%, at 31,338.15. The Nasdaq has risen in five straight days for the first time this year.
Nonfarm payrolls increased 372,000 in the month of June, better than the 250,000 Dow Jones estimate and continuing what has been a strong year for job growth, according to data Friday from the Bureau of Labor Statistics.
All three major averages finished up for the week. The jobs report and a recent decline in commodities prices have made a have made a so-called "soft landing" for the U.S. economy a bit more likely, boosting stocks, said Yung-Yu Ma, chief investment strategist at BMO Wealth Management.
"Some of what were very acute recession fears have probably backed off a little bit. ... I think the market started to accept that a little more as a possibility this week," Ma said.
Health care stocks were among the outperformers. Centene Corp. and McKesson rose more than 3%, while vaccine makers Moderna and Regeneron each added more than 2%.
Electric automaker Tesla jumped 2.5%. Chipmakers and cyber security stocks also boosted the tech sector. ON Semiconductor rose 2.8%, while Fortinet gained 1.8%.
Treasury yields jumped sharply after the jobs data was released, which may have limited gains for stocks. The 2-year Treasury yield held above the 10-year Treasury yield, an inversion that is seen by many as a recession indicator.
Though the jobs report was a positive sign for the state of the U.S., many investors believe that will allow the Federal Reserve to aggressively fight inflation with rate hikes in the coming months.
"Good news is bad news for the market today...you couldn't ask for anything better from this jobs report in terms of broad gains, low unemployment, the number was above expectations," said Michael Arone of State Street Global Advisors. "Wages were growing but at a slower rate. …That was a good thing, and yet the markets kind of shrugged their shoulders here because at the end, the conclusion is the Fed is going to go by 75 basis points."
For the week, the Nasdaq closed up 4.6%, while the S&P 500 gained 1.9%. The Dow lagged but still gained about 0.8%.
Phillip Toews, the CEO at Toews Corporation, said that the market appears to be "drifting higher" from oversold conditions but that the aggressive Fed will keep a larger rally from happening in the short term.
"Unfortunately, the Fed really implicitly has an objective now of keeping financial assets down, and we're just going to have a very hard time getting used to that," Toews said. "That's one of the biggest things they can do right now to move the dial on inflation. ...There will be a day when I am very positive about the stock market, but that day is not today."
On Friday, commodities stocks underperformed, continuing recent volatility in those sectors. Mining stock Freeport-McMoRan lost 4.2%.
Travel stocks were down for the day, with Caesars Entertainment falling 4.7% and Carnival Corp. falling 3.4%.
Twitter fell more than 5% and was among the worst performers in the S&P 500 after the Washington Post reported that Elon Musk was planning to back out of his takeover offer.
The second-quarter earnings season begins in earnest next week, with reports due out from most major banks. The June consumer price index report, scheduled for Wednesday, will also be a key focus for investors.
— CNBC's Patti Domm contributed to this report.