Wall Street flat as rate hike eyed; banks counter utilities drop

US stocks ended little changed on Friday, with a rise in financials countered by a slide in utilities and other sectors, as Wall Street took the strong US jobs report as evidence the Federal Reserve will soon raise interest rates.

Since the Fed last week opened the door to a rate increase in December, investors have been looking to economic reports for clues to whether the central bank will take action. Data on Friday showed US non-farm payrolls growth in October was the best since December 2014, while the unemployment rate fell to 5%, the lowest since April 2008.

The three major indexes posted higher weekly performances for the sixth week in a row, after posting their best monthly results in four years in October.

 

The overall market on Friday was "holding up well," Peter Jankovskis, co-chief investment officer at OakBrook Investments in Lisle, Illinois, who noted that a Fed action would indicate the economy is healthy enough to tolerate higher rates.

"While higher interest rates themselves are not a good thing, a vote of confidence in the strength of the economy I think is going to overshadow that over time," Jankovskis said.

The Dow Jones industrial average rose 46.9 points, or 0.26%, to 17,910.33, the S&P 500 lost 0.73 points, or 0.03%, to 2,099.2 and the Nasdaq Composite added 19.38 points, or 0.38%, to 5,147.12.

The S&P financial sector rose 1.1%, leading all sectors. Banks tend to benefit from higher borrowing rates, and shares of JPMorgan , Bank of America and Citigroup each climbed at least 3%, making them the biggest positive influences on the S&P.

The rate-sensitive utilities sector dropped 3.6%, the worst performing group. The S&P consumer staples sector fell 1.1%, while the energy group dipped 0.4% as crude oil prices were down.

"The market is reacting today as if rates will be increased in December," said Ben Halliburton, chief investment officer at Tradition Capital Management in Summit, New Jersey.

"They're rotating money to take advantage of that or cut back where they're not going to be advantageous," Halliburton added.

Alibaba fell 2.1% to $83.61 after a CNBC report said short-seller Jim Chanos pitched the company as a possible short.

Shares of Disney rose 2.4% to $115.67 after it reported a higher-than-expected profit.

ZS Pharma shares jumped 40.6% to $89.04 after Britain's AstraZeneca agreed to buy the biotech company for $2.7 billion.

Tableau Software shares jumped 21.4% to $102.44 after higher-than-expected results, with other data analytics stocks also rising.

Declining issues outnumbered advancing ones on the NYSE by 1,931 to 1,186, for a 1.63-to-1 ratio on the downside; on the Nasdaq, 1,726 issues rose and 1,086 fell for a 1.59-to-1 ratio favoring advancers.

The S&P 500 posted 15 new 52-week highs and 9 new lows; the Nasdaq recorded 151 new highs and 70 new lows.