The Dow dipped and the S&P 500 clung to a tiny gain on Friday as investors wrestled with the prospect that the Federal Reserve might have to raise interest rates after data showed the economy shed far fewer jobs than expected last month.
The U.S. dollar's strength hit the prices of global commodities like crude oil and gold, which, in turn, weighed on shares of natural resource companies. The S&P materials index <.GSPM> fell 1.6 percent.
The Nasdaq, meanwhile, held onto a modest lift from chipmakers, including Intel Corp
U.S. employers cut 11,000 jobs in November, the smallest loss since the start of the recession in December 2007, and the unemployment rate also dipped, according to a Labor Department report.
To foster a recovery, the Federal Reserve has kept U.S. benchmark interest rates close to zero percent, a stance that analysts said might have to change as the economy showed more signs of life.
Employment was significantly below what people were expecting in terms of job losses, (but) the rally in the dollar is pushing down the commodity sectors, said Owen Fitzpatrick, head of the U.S. Equity Group at Deutsche Bank Private Wealth Management, in New York.
The Dow Jones industrial average <.DJI> was down 8.24 points, or 0.08 percent, at 10,348.06. But the Standard & Poor's 500 Index <.SPX> was up 1.55 points, or up 0.14 percent, at 1,101.47. And the Nasdaq Composite Index <.IXIC> was up 9.07 points, or 0.42 percent, at 2,182.21.
Earlier in the session, all three major U.S. stock indexes touched 15-month highs following the monthly payrolls report.
The government also reported that the U.S. unemployment rate slipped in November to 10.0 percent from October's rate of 10.2 percent, which was a 26 1/2-year high.
The U.S. dollar's strength caused investors to unwind some of their dollar carry-trade positions, according to analysts.
Since the broader market hit a bottom in early March, stocks and the dollar have had a strong inverse correlation. When the dollar falls, stocks tend to rise and vice versa.
That correlation partly reflects the so-called carry trade, whereby investors borrow a currency offering relatively low borrowing costs in order to invest the proceeds in higher-yielding assets denominated in that low-yield currency.
The S&P energy index <.GSPE> declined 0.9 percent.
In contrast, the U.S. dollar index <.DXY>, which measures the greenback against a basket of six other major currencies, jumped 1.6 percent.
(Editing by Jan Paschal)