Stock market shakes off an early loss and turns higher

Last Updated May 6, 2016 4:41 PM EDT

NEW YORK - The stock market shook off an early slump and ended modestly higher, breaking a three-day slump.

Stocks had opened lower after the government reported a disappointing slowdown in hiring last month, but by mid-afternoon major indexes turned higher and stayed up for the rest of the day.

Investors are hoping that the pullback in hiring will make it even less likely that the Federal Reserve will raise interest rates at its policy meeting next month and may hold off on raising rates entirely for the rest of the year.

The Dow Jones industrial average rose nearly 80 points, or 0.5 percent, to 17,741. The Standard & Poor's 500 index added almost seven points, or 0.3 percent, to 2,057. The Nasdaq composite climbed 19 points, or 0.4 percent, to 4,736.

The Labor Department said employers created just 160,000 jobs in April. The unemployment rate remained steady at 5 percent. The amount of job creation was significantly below the 200,000 jobs that economists were expecting.

While one month does not make a trend, there have been a few economic reports this week from across the globe that have shown signs of a slowdown last month. A closely watched Chinese manufacturing survey showed production contracted last month and European Union officials trimmed their forecasts for growth across the 19 countries that use the euro.

"Once again, we received evidence that the U.S. economy is just bumbling along and will most likely remain so until after the U.S. presidential election," Tom di Galoma, a managing director of fixed income at Seaport Global, wrote in a report to clients.

Di Galoma added that the April jobs report significantly reduces the possibility that the Federal Reserve will interest rates in June or even later this year. "In my view, a rate hike potential this year is nearing zero probability."

That view appears to be widely held. Fed fund futures, which are securities that allow traders to bet on which way the Fed will move interest rates, show that a majority of investors do not expect the Fed to raise rates until February 2017.

Payment processing company Square dropped after the company, run by Twitter founder Jack Dorsey, reported a larger than expected quarterly loss and saw its expenses climb sharply in the quarter.

Benchmark U.S. crude oil rose 34 cents to close at $44.66 a barrel on the New York Mercantile Exchange. Brent crude, used to price international oils, climbed 36 cents to close at $45.37 a barrel in London.

U.S. government bond prices were little changed. The yield on the benchmark U.S. 10-year Treasury note held steady at 1.75 percent. The euro rose to $1.1424 from $1.1398 and the dollar declined to 106.70 yen from 107.25 yen.

Gold rose $21.70 to $1,294 an ounce, silver rose 20 cents to $17.53 an ounce and copper was unchanged at $2.15 a pound.