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Wall Street stalls; S&P 500 drifts after 5-day win streak

NEW YORK (AP) — Wall Street is drifting on Friday, as a better-than-expected report on the U.S. jobs market jousts with worries about rising U.S.-China tensions and whether Washington can deliver more aid for the economy.

The S&P 500 was holding steady in morning trading, virtually flat after erasing an earlier, small loss. It's coming off a five-day winning streak that had brought it back within 1.1% of its record.

The Dow Jones Industrial Average was down 48 points, or 0.2%, at 27,340, as of 10:53 a.m. Eastern time, while the Nasdaq composite added 0.1% to its record.

The day's headline economic report showed that the U.S. job market strengthened more last month than economists expected, with employers adding 185,000 more jobs than the nearly 1.6 million that investors expected to see. Analysts said they found some encouraging pieces of data scattered throughout the report, such as a stronger-than-expected rise in average hourly earnings.

Several areas of the market that tend to do well when investors are feeling more optimistic about the economy were doing better. Stocks of smaller companies rose, with the Russell 2000 up 0.9%. Treasury yields also ticked higher.

“Yes, future employment data will likely slow due to more COVID-19 restrictions, but for now you have to be quite impressed with how far we’ve come the last few months,” Ryan Detrick, chief investment strategist for LPL Financial, said in a statement.

Still, the job report also showed that hiring slowed in July after two months of acceleration and the job market remains far below where it was before the pandemic.

“What is concerning is that the rate of improvement, without a significant vaccine breakthrough, will continue to be more modest and deliberate from here,” Rick Rieder, BlackRock’s chief investment officer of global fixed income, said in a statement.

It’s a very busy day for markets, with investors also focused on Capitol Hill, where Congress and White House officials have been negotiating on a hoped-for deal on more aid for the economy. A marathon meeting Thursday left both sides still far apart on key issues, and they both said the future of talks is uncertain.

Investors say it’s crucial that Washington pump more money into the economy, and quickly, after $600 in weekly unemployment benefits from the federal government expired. The economy has shown signs of improvements since the spring but is still hobbling amid worries about a resurgence in coronavirus counts.

Trump is considering executive orders to address some of the issues if Congress doesn’t reach a deal, such as evictions and unemployment insurance, but they appear unlikely to have much impact.

Much of the market’s focus was also on moves Trump did make Thursday night: He ordered a sweeping but vague ban on dealings with the Chinese owners of popular social media apps TikTok and WeChat on security grounds.

China’s government criticized the move as “political manipulation.”

Tensions between the world’s two largest economies have been escalating for years, highlighted by the U.S.-China trade war that seemed to have reached at least a temporary truce early this year. But tough talk has continued to flow, with Trump keying in on TikTok in particular recently.

Slightly more stocks were falling on Wall Street than rising, with energy producers and raw-material companies taking some of the sharpest losses within the S&P 500.

The yield on the 10-year Treasury erased an earlier dip to rise to 0.54% from 0.53% late Thursday.

Gold slipped, a rare step back following its record-setting run as investors seek safety amid a weak global economy, trade tensions and low interest rates. It lost 1.1% to $2.047.20 per ounce.

Benchmark U.S. crude fell 1.4% to $41.38 per barrel. Brent crude, the international standard, lost 0.8% to $44.73.

In China, stocks in Shanghai lost 1%. The Hang Seng in Hong Kong dropped 1.6%, while Japan’s Nikkei 225 slipped 0.4% and South Korea’s Kospi added 0.4%.

In Europe, Germany’s DAX returned 0.7%, and France’s CAC 40 rose 0.2%. The FTSE 100 in London added 0.1%.

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AP Business Writer Yuri Kageyama contributed.

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