A tepid jobs report caused the stock market to stall on Friday, a day after the Standard & Poor’s 500 index broke through 1,700 points for the first time.
Indexes edged down after the U.S. added fewer jobs than forecast in July, curbing optimism that the economy is poised to pick up strength in the second half of the year.

The government reported that 162,000 jobs were created last month, pushing the unemployment rate down to a 4 1/2 -year low of 7.4 percent. The number of jobs added was the lowest since March and well below the 183,000 economists polled by FactSet were expecting.

Brad Sorensen, Charles Schwab‘s director of market and sector research, said the jobs report was “moderately disappointing.”

“That tepid growth we’ve seen, (the economy) not being able to reach escape velocity, continues to be the story,” Sorenson said.

Investors have been watching economic reports closely and trying to anticipate when the Federal Reserve will start easing back on its economic stimulus. The central bank is buying $85 billion in bonds every month to keep long-term interest rates low and encourage borrowing.

The decline in stocks Friday was muted, and indexes gradually erased some of their losses by early afternoon. While the jobs report was disappointing, it likely ensured that the Fed would take its time cutting back on stimulus, said Doug Lockwood of Hefty Wealth Partners.

“As long as there’s this concept that the Fed may still need to be involved and stimulate, that’s good for both the bond and the stock market,” said Lockwood. “You’re seeing the trampoline effect; the market drops and then comes back up.”

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