US close: Stocks edge higher as economists debate outlook for Fed policy

Wall Street ended higher on Friday following a strong February jobs report, removing the last obstacle to an interest rate hike from the Federal Reserve next week, although looking further out there still appeared to be some divisions among economists regarding the US central bank's policy path.

The Dow Jones Industrial Average finished 0.21% higher to 20,902.98, the S&P 500 added 0.33% or 7.73 points to 2,372.60 and the Nasdaq was 0.39% firmer at 5,861.73.

Meanwhile, oil prices ended the session lower as Baker Hughes announced the US onshore oil rig count rose by another eight during the week ended on 10 March to 617.

West Texas Intermediate fell 1.81% to $48.39 a barrel, it went below the $50 mark for the first time in 2017 on Thursday.

February’s non-farm payroll rose to 238,000 from 227,000 the previous month and above the 200,000 consensus forecast. The net revision was 9,000.

Hourly earnings rose 0.23%, below the 0.3% consensus, but the net revision was up 0.12%, so the year-on-year rate increased to 2.8% from 2.6%, as expected, while unemployment dipped a tenth to 4.7%, in line forecasts.

Manuel Ortiz-Olave, market analyst at Monex Europe said that investors are now more sceptical about forthcoming hikes.

He said that the report was solid with the unemployment rate falling, labour force participation rising and the underemployment rate decreasing, but despite a massive increase in job creation in the first two months of 2017, wage growth missed estimates even after several states increased the minimum wage.

Fed chair Janet Yellen and vice chair Stanley Fischer suggested last week that the central bank only intends to hike interest rates if wage inflation continues to increase and employment keeps meeting the Fed’s expectations.

Ortiz-Olave said that with the recent substantial increase in US crude oil inventories, market bets of falling inflation are increasing, which could delay additional rate hikes from the Fed.

For their part, economists at Barclays Research chimed in saying: "Overall, the headline job numbers in this report were stronger than we had expected; however, we see no reason to be overly optimistic in the detail.

"In our view, payroll increases in the 200k range are consistent with continued economic expansion, and as long as labor markets improve at or around this pace, we view risks surrounding the recovery as broadly balanced and see no substantive recession concerns."

Analysts at Goldman Sachs on the other hand reportedly told clients following the report that four Fed rate hikes in 2017, instead of three, was a "close call".

The yield on the benchmark 10-year US Tresury note fell back three basis points to 2.58%.

In corporate news, Commercial Vehicle Group was down 1.97% after posting a fourth quarter profit but revenue fell, while Everspin Technologies was 3.19% weaker after reporting a fourth quarter drop in revenue.

Southwest Airlines was 0.85% weaker after it lowered its unit revenue outlook for the first quarter.

From a sector standpoint, Marine Transportation gained 2.58%, Home Construction was up 1.73% and Recreational Services tacked on another 1.67%.