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* Nonfarm payrolls rise by 199,000 in December
* GameStop jumps after report of foray into NFT, crypto
* Indexes: Dow -0.06%, S&P -0.01%, Nasdaq +0.07%
Jan 7 (Reuters) - Wall Street's main indexes were muted on
Friday after data pointed to weaker-than-expected job growth
last month, while banking shares extended gains and battered
technology stocks bounced from sharp declines suffered this
Seven of the 11 major S&P sectors advanced in early trading.
Defensive sectors were the sole losers, while energy,
financials and industrials outperformed. The banking
index added 0.9%.
Beaten-down megacaps including Apple Inc, Microsoft
Corp, Meta Platforms Inc, Amazon.com Inc
and Tesla Inc rose between 0.5% and 0.9%,
lifting the S&P 500 and Nasdaq indexes.
Meanwhile, the Labor Department's report showed nonfarm
payrolls increased by 199,000 jobs in December, although the
unemployment rate dropped to 3.9% from 4.2% in November,
underscoring tightening labor market conditions.
Economists surveyed by Reuters expected nonfarm payrolls to
increase by 400,000 jobs in December. The average hourly
earnings rose by 0.6% against expectations of 0.4%.
"This employment report continues to underscore the idea
that the Fed will have to tackle inflation in a tight labor
market," said Michael Arone, chief investment strategist at
State Street Global Advisors in Boston.
"Investors are anticipating that the Fed will raise rates
and continue to quantitative tightening. Investors are concerned
the Fed will be more aggressive than expected."
Fed funds futures imply a 90% chance of a 25-basis
point tightening at the March Fed meeting, and at least three
interest rate hikes by the end of the year.
The data comes after the minutes from the Federal Reserve's
December meeting signaled the central bank may have to raise
interest rates sooner than expected amid a "very tight" job
market and unabated inflation.
The hawkish tone spurred a rally in U.S. Treasury yields,
prompting investors to swap technology-heavy growth shares with
more cyclical parts of the market that tend to do better in a
high interest-rate environment.
The S&P 500 energy sector, which has gained 9.2% so
far this week, was set for its best weekly rise in ten months.
The broader value index added 0.9% this week,
outperforming its growth counterpart, which is eyeing its
worst week since late February 2021.
At 10:07 a.m. ET, the Dow Jones Industrial Average
was down 20.30 points, or 0.06%, at 36,216.17, the S&P 500
was down 0.65 points, or 0.01%, at 4,695.40, and the
Nasdaq Composite was up 11.18 points, or 0.07%, at
All the three major Wall Street indexes are set for a weekly
"Meme stock" GameStop Corp jumped 11.1% after the
video game retailer said it is launching a division to develop a
marketplace for nonfungible tokens and establish cryptocurrency
Starbucks Corp fell 1.6% after RBC downgraded the
specialty coffee retailer's stock to "sector perform" from
"outperform" on valuation and margin outlook.
Discovery Inc added 12.6% after Bank of America
upgraded the media company's stock to "buy" from "neutral".
Advancing issues outnumbered decliners by a 1.44-to-1 ratio
on the NYSE and a 1.40-to-1 ratio on the Nasdaq.
The S&P index recorded 22 new 52-week highs and one new low,
while the Nasdaq recorded 43 new highs and 67 new lows.
(Reporting by Devik Jain in Bengaluru and Sinead Carew; Editing
by Maju Samuel)