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[BRIEFING.COM] The major averages finished mixed and relatively unchanged as investors struggled to make sense of the May employment report, first weighing increased expectations of a possible pause (no more rate hikes for now) but then still worried about the economy slowing too much to sustain robust profit growth. The latter concern underscores why our view remains neutral for the stock market as investors come to grips with the reality that earnings growth expectations will have to be lowered.

Before the bell, the Labor Dept. showed that employers added less than half of the number of jobs in May than were anticipated. Non-farm payrolls rose just 75,000 -- the smallest monthly job gain since last October and well below an expected 170,000 increase. A modest 0.1% rise in hourly earnings also helped improve early sentiment, as it suggested that cost-push inflationary pressures from wages were not as bad as many feared. To wit, Treasuries rallied as the yield on the 10-yr note closed below the psychological 5.00% level for the first time since April 24th and 21 basis points off an almost four-year high of 5.20% reached just two weeks ago. Be that as it may, falling bond yields only seemed to excite rate-sensitive areas like Financials and Utilities, as split industry leadership dictated the action throughout the day.

The only other sectors to trade higher were Energy, Materials and Health Care. Energy offered the biggest source of support as oil prices surged 3.4%. Crude oil futures closed at $72.70 a barrel, getting an early boost when the dollar got hammered after a second straight soft payrolls number added to the argument that previous rate hikes are having the desired impact of slowing overall demand. Additional safe-haven buying going into the weekend, after Iran's President said the West won't deprive Iran of nuclear technology and reports surfaced of a rig attack in Nigeria, closed the inflation proxy at session highs.

Materials also turned in a strong performance, as gold bounced off its five-week low to close up 1.2% at $641/ounce; but like Energy and Utilities, leadership from less influential sectors provided little overall support for the broader market. Health Care, though, was a more influential leader to the upside, but its modest gains largely came from two of its most influential components. Pfizer (PFE 24.19 +0.29) climbed 1.1% to its best level in two weeks, amid reports that GlaxoSmithKline (GSK 55.99 +0.01) was reportedly close to offering about $15 bln for PFE's consumer health-care unit, while UnitedHealth Group (UNH 46.98 +1.26) added nearly 3% to yesterday's guidance-induced 4.0% surge.

Consumer Discretionary turned in the worst performance amid weakness in homebuilding, as Pulte Homes (PHM 31.34 -1.69) hit a 52-week low after it further validated a slowdown in housing by cutting its full-year earnings outlook. Consolidation in retail, following yesterday's strong May sales-induced run up, also weighed on the sector while Technology failing to extend Thursday's strong performance (+1.7%) also stalled follow-through buying efforts.
NYSE Adv/Dec 2177/1108...Nasdaq Adv/Dec 1561/1427