NEW YORK, Dec 3 — US Treasury yields were lower and Wall Street’s benchmark S&P 500 ended down but well above the day’s lows yesterday as investors digested a stronger than expected jobs report, which had raised concerns about the Federal Reserve’s ability to slow rate hikes.

The US Labour Department reported that nonfarm payrolls increased by 263,000 jobs last month compared with economist expectations for 200,000 jobs. And average hourly earnings increased 0.6 per cent, up from 0.5 per cent in October.

The report — released two days after Fed Chair Jerome Powell said it could be time to slow the pace of rate hikes — made investors question whether the central banker would be able to follow through on his suggestion.

Still, the S&P 500 closed down 0.12 per cent, compared with its earlier decline of 1.23 per cent in morning trading.

The stock market’s turnaround yesterday showed that the sentiment boost from Fed meeting minutes last week and Powell’s comments Wednesday had "put the bulls firmly in charge,” according to Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

"That sentiment shift has been more powerful than any ‘negativity’ to be taken from today’s jobs report,” he said.

However, while Chicago Federal Reserve Bank President Charles Evans made comments yesterday that the Fed will probably reach a slightly higher peak funds rate, he still talked about stepping down the pace of rate hikes from recent 75-basis-point increases.

After the payrolls report traders were betting that the Fed would raise its policy rate from the 3.75 per cent-4 per cent range implied earlier to 4.92 per cent by March 2023 and to the 5 per cent-5.25 per cent range by May, based on futures contract prices and the CME Fedwatch tool. Before the report, the rate was seen topping out at 4.75 per cent-5 per cent.

The Dow Jones Industrial Average rose 34.87 points, or 0.1 per cent, to 34,429.88, the S&P 500 fell 4.87 points to 4,071.7 and the Nasdaq Composite dropped 20.95 points, or 0.18 per cent, to 11,461.50.

The S&P, Nasdaq and the Dow all boasted their second weekly gains in a row, while the Nasdaq led the charge with a 2 per cent advance. The S&P added 1 per cent for the week while the Dow was up 0.2 per cent.

MSCI’s gauge of stocks across the globe shed 0.15 per cent on the day but added 1.5 per cent for the week.

The dollar gradually gave back its gains following Evans’ comments. Earlier it had jumped sharply in response to the jobs data, gaining as much as 0.82 per cent.

Recently, the dollar index, which measures the greenback against a basket of major currencies, was down 0.143 per cent, with the euro up 0.14 per cent to US$1.0537 (RM6.74).

The Japanese yen strengthened 0.77 per cent versus the greenback at 134.27 per dollar, while Sterling GBP= was last trading at US$1.2279, up 0.21 per cent on the day.

In Treasuries, yields turned lower after earlier rising sharply as investors eyed the resilient labour market and rising wages as worrisome for the Fed’s efforts to tame inflation.

Benchmark 10-year note yields were up 2.7 basis points to 3.554 per cent, from 3.527 per cent late on Thursday. The 30-year bond yield was last down 3.9 basis points at 3.594 per cent, from 3.633 per cent. The 2-year note yield was last was up 7.1 basis points at 4.3255 per cent from 4.254 per cent.

Oil futures sank in yesterday's choppy session ahead of a meeting of the Organisation of the Petroleum Exporting Countries and its allies (Opec+) tomorrow and an EU ban on Russian crude on Monday.

US crude settled down 1.5 per cent at US$79.98 per barrel and Brent ended at US$85.57, also down 1.5 per cent on the day.

Gold prices also regained some lost ground from their earlier reaction to the jobs data.

Spot gold dropped 0.3 per cent to US$1,797.69 an ounce after earlier falling as much as 1.4 per cent. — Reuters