12:59 PM EST, 12/06/2024 (MT Newswires) -- US equity indexes traded mixed while most government bond yields fell as a higher unemployment rate accompanied a stronger-than-expected increase in nonfarm payrolls.

The S&P 500 edged 0.2% higher to 6,087.5, and the Nasdaq Composite climbed 0.6% to 19,821.6 after midday Friday. The Dow Jones Industrial Average fell 0.2% to 44,669.8. The S&P 500 and the Nasdaq made fresh intraday record highs, and the Dow traded close to its all-time peak.

Communication services, consumer discretionary, and technology were among the gainers intraday. Energy led the decliners.

The nonfarm payrolls report showed Friday that the unemployment rate rose to 4.2% in November from 4.1% in October, compared with expectations for no change. The labor force participation rate slipped to 62.5% from 62.6% in the previous month, and the size of the labor force contracted.

However, payrolls rose by 227,000, above the 220,000 jobs increase expected in a Bloomberg survey compilation. October payrolls saw an upward revision to a 36,000 increase and September payrolls to a 255,000 gain, reflecting a net jump of 56,000 jobs.

Hourly earnings rose by 0.4%, up from the 0.3% gain expected, following a 0.4% increase in October. Hourly earnings were up 4% year-over-year.

"The rise in the unemployment rate despite the lower labor force participation rate hinted at softening, but it reflected somewhat slower hiring rather than new layoffs. We continue to expect 25bp cut at the [December Federal Open Market Committee]," Morgan Stanley Chief Economist Michael Gapen wrote in a research note. "A solid rebound in payrolls and upward revision are consistent with strong output & consumption growth in 4Q."

The probability of a 25 basis point cut in interest rates in December soared to 87% by Friday afternoon from 71% a day ago, according to the CME Group's FedWatch Tool. Through October next year, the market has priced only three rate reductions.

Fed Chair Jerome Powell said this week policymakers can be cautious while easing monetary policy, given the strength of the US economy.

In other economic news, the University of Michigan's preliminary consumer sentiment index rose to 74 in December from 71.8 in November, hitting its highest in seven months and above expectations for 73.3 in a survey compiled by Bloomberg. Respondents saw one-year inflation expectations at 2.9%, up from 2.6% in November, while five-year inflation expectations slowed to 3.1% from 3.2%.

Most Treasury yields declined, with the US 10-year down 2.1 basis points to 4.16% and the two-year dropped 4.6 basis points to 4.1%. The 30-year yield stood little changed at 4.34%.

In company news, Lululemon Athletica's ( LULU ) shares soared past 18% intraday, the top performer on the S&P 500 and the Nasdaq, after the company reported late Thursday a surge in fiscal Q3 earnings and revenue, and raised its guidance for fiscal 2024.

Ulta Beauty ( ULTA ) shares jumped past 9.8% intraday, the second-highest return on the S&P 500, as the company reported higher fiscal Q3 earnings per share and net sales while raising its full-year EPS guidance.

West Texas Intermediate crude oil futures slumped 1.2% to $67.45 a barrel.

Gold rose 0.5% to $2,660.11 an ounce, and silver climbed 0.3% to $31.63 an ounce.