U.S. Stocks Edge Higher As Investors Weigh Jobs Data, Rate Bets  

(Bloomberg) -- U.S. stocks edged higher, with an earlier rally losing some steam amid underwhelming labor-market data that did little to bolster confidence growth will be steady enough to support stronger corporate earnings.

Equities trimmed an advance spurred by speculation the August jobs report would keep the Federal Reserve from raising interest rates this year. The odds for a rate hike this month dipped as low as 20 percent before climbing back to levels held before the data. Energy shares buoyed the market, as crude rallied more than 3 percent.

The S&P 500 Index rose 0.3 percent to 2,176.55 at 2:15 p.m. in New York, after climbing as much as 0.7 percent. The Dow Jones Industrial Average added 45.13 points, or 0.3 percent, to 18,464.43, paring an early 125-point jump. The Nasdaq Composite Index increased 0.2 percent. Trading volume in S&P 500 shares was 6 percent below the 30-day average for this time of day. U.S. equity markets are closed Monday for Labor Day.

“There’s no question that the number lowers the odds of a September rate hike, but I wouldn’t say it’s been completely taken off the table,” said Matt Maley, an equity strategist in New York at Miller Tabak & Co LLC. “It doesn’t seem like currency and credit markets have taken September off the table yet.”

Payrolls climbed by 151,000 last month following a 275,000 gain in July that was larger than previously estimated, according to the Labor Department. The median forecast in a Bloomberg survey called for 180,000. The jobless rate and labor participation rate held steady, while wage gains moderated.

While Fed Chair Janet Yellen left the timing of an interest-rate hike open in a speech last week, she said the central bank’s decisions depend on the degree that data “continues to confirm” the outlook. That, and other recent remarks by Fed officials, suggest that job gains need to be merely solid -- rather than extraordinary -- to warrant raising borrowing costs for the first time in 2016.

Even as some saw the lower-than-forecast payroll gains as reason enough for the Fed to stand pat, traders weren’t so sure. Fed-funds futures reflected a 32 percent chance the central bank will boost rates at its September meeting, according to data compiled by Bloomberg, rebounding from a slide to 20 percent immediately following the jobs report. Odds of a December hike are 60 percent.

“This number is important in whether the Fed hikes in September, and along with the ISM report helps push a September rate hike off the table,” said Jeffrey Kleintop, Charles Schwab Corp.’s chief global investment strategist. “The move in the market is probably related to a little sense of relief that a rate hike will be pushed off. Given the ISM was weaker, some people would’ve been concerned if the Fed went in September.”

With today’s climb, the S&P 500 has gained 0.3 percent this week, after ending in the red for the prior two. Since the gauge reached a record in mid-August, it’s been stuck in neutral amid Fed rate-hike speculation and lackluster economic data, including a reading yesterday showing manufacturing activity contracted last month. The benchmark index hasn’t seen a 1 percent move in either direction for 39 days, the longest such streak in more than two years.

August employment reports tend to miss economist estimates, and that’s typically been bad news for equities. Since 1996, 15 out of 19 releases have trailed forecasts, data compiled by Bloomberg show. When they did, the S&P 500 Index fell an average 0.4 percent, compared with a mean increase of 0.1 percent for all payrolls days.

In Friday’s trading, energy, utilities, raw-materials and consumer-staples shares were the strongest among the S&P 500’s main industries, rising at least 0.5 percent. Health-care and phone companies, lagged, little changed for the session.

The CBOE Volatility Index fell 7.6 percent to 12.46, only its second drop in 10 days. The measure of market turbulence known as the VIX is coming off its biggest monthly increase in a year after surging in late August from its lowest level since 2014.

Energy producers snapped a three-day losing streak as West Texas Intermediate crude futures gained 3 percent to $44.44 a barrel. Russian President as Vladimir Putin said he’d like Russia and OPEC to reach an oil output freeze apart from Iran. Anadarko Petroleum Corp. and Marathon Oil Corp. rose more than 3.2 percent.

Among shares moving on corporate news, Lululemon Athletica Inc. fell 9.2 percent, the most since December, after its forecast missed some estimates, sparking concern about slowing demand and competition in athletic apparel.

Carnival Corp. lost 4.7 percent, the most in two months, after Morgan Stanley downgraded the shares to the equivalent of sell from neutral. Royal Caribbean Cruises Ltd. fell 3.5 percent to halt its longest winning streak in five weeks.