The S&P 500 eked out a slight gain Friday, but posted its first weekly decline since Donald Trump was elected president.
Investors have pulled out of long-dated government bonds and put money into financial and industrial shares since Election Day, helping push major U.S. indexes to record highs. Many expect Mr. Trump’s policies to include fiscal stimulus and reduced regulation, driving expectations for stronger growth and higher inflation.
But the rally stalled this week. Gains in energy shares—spurred by soaring oil prices—weren’t enough to offset declines elsewhere, particularly in technology shares.
U.S. stocks were mixed after Friday’s jobs report, which showed unemployment falling to its lowest level in nine years in November, doing little to alter major indexes’ overall performance for the week. Meanwhile, the rout in U.S. government bonds eased.
Some analysts said weakness in average hourly wages suggested the Federal Reserve would remain on a slow path of interest-rate increases, but that the jobs report contained enough signs of labor-market strength to keep the central bank on course to raise rates this month as expected.
“The biggest risk to stock markets is the significant rise in rates,” said Krishna Memani,chief investment officer at OppenheimerFunds.
A meaningful repricing of the path for U.S. interest rates could “bring down the equity market on its own,” he said.
The Dow Jones Industrial Average fell 21.51 points, or 0.1%, to 19170.42 Friday but held onto a 0.1% gain for the week.
The S&P 500 and the Nasdaq Composite Index, however, posted weekly declines for the first time since the week ended Nov. 4.
The S&P 500 rose 0.87 point, or less than 0.1%, to 2191.95 Friday and lost 1% over the week, while the Nasdaq Composite rose 4.55 points, or 0.1%, to 5255.65 Friday—a weekly decline of 2.7%.
Dividend stocks were among Friday’s gainers after the jobs report.
U.S. employers added a seasonally adjusted 178,000 jobs in November from the previous month, the Labor Department said. Economists surveyed by The Wall Street Journal had forecast a gain of 180,000. The unemployment rate fell to 4.6% last month, the lowest since August 2007, from 4.9% in October.
Shares of real-estate companies climbed 1.2% in the S&P 500 while utilities rose 0.9%. Financials, which have tended to move inversely from such bond proxies, fell 0.9%.
The WSJ Dollar Index, which measures the U.S. currency against 16 others, fell 0.4%.
Energy shares were the week’s best performers, gaining 2.6% in the S&P 500 as crude-oil prices surged after the Organization of the Petroleum Exporting Countries agreed to pull back their output. U.S. crude rose 12% to $51.68 a barrel, the largest one-week percentage gain since 2009.
Meanwhile, the tech sector fell 2.9% in the week, weighing on the tech-heavy Nasdaq. Tech shares have suffered since the election amid concerns about the potential for stricter trade and immigration policies under President-elect Donald Trump’s administration.
The Stoxx Europe 600 fell 0.9% for the week, with Italy’s FTSE MIB index posting a weekly gain of 3.5% ahead of Sunday’s Italian referendum on constitutional reform. The vote has some investors worried that political uncertainty in Italy could increase pressure on the country’s banks and lift support for euroskeptic parties across the Continent.
The FTSE MIB sits 20% lower in 2016, while Italian bank shares are down nearly 50% and the yield gaps between 10-year Italian bonds and their Spanish and German counterparts are near their widest in years.
“Given the underperformance of Italian bonds and equities over the course of this year, a lot of bad news seems to be already in the prices,” said Stefano di Domizio, head of fixed income at Absolute Strategy Research.
“We’re keen to play the contrarian trade,” he said, as a “no” vote on Sunday could still lead to the relatively benign outcome of a technocratic caretaker government, while a “yes” vote would be market friendly, he said.