November 6, 2015 / 12:29 PM / 4 years ago

Wall St. flat as rate hike eyed; banks counter utilities drop

(Reuters) - U.S. 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 U.S. jobs report as evidence the Federal Reserve will soon raise interest rates.

Traders work on the floor of the New York Stock Exchange November 5, 2015. REUTERS/Brendan McDermid

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 U.S. non-farm payrolls growth in October was the best since December 2014, while the unemployment rate fell to 5 percent, 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 .DJI rose 46.9 points, or 0.26 percent, to 17,910.33, the S&P 500 .SPX lost 0.73 points, or 0.03 percent, to 2,099.2 and the Nasdaq Composite .IXIC added 19.38 points, or 0.38 percent, to 5,147.12.

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

The rate-sensitive utilities sector .SPLRCU dropped 3.6 percent, the worst performing group. The S&P consumer staples sector .SPLRCS fell 1.1 percent, while the energy group .SPNY dipped 0.4 percent 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 (BABA.N) fell 2.1 percent to $83.61 after a CNBC report said short-seller Jim Chanos pitched the company as a possible short.

Shares of Disney (DIS.N) rose 2.4 percent to $115.67 after it reported a higher-than-expected profit.

ZS Pharma ZSPH.O shares jumped 40.6 percent to $89.04 after Britain’s AstraZeneca (AZN.L) agreed to buy the biotech company for $2.7 billion.

Tableau Software DATA.N shares jumped 21.4 percent 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.

Additional reporting by Charles Mikolajczak, and Abhiram Nandakumar in Bengaluru,; Editing by Savio D'Souza and Chizu Nomiyama

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