NEW YORK (AP) -- U.S. stocks are slipping Friday, as Wall Street takes its first breather from a torrid run this week on enthusiasm about the upside of potential gridlock in Washington.
Optimism was still pumping through other areas of the market, though, and Treasury yields rallied after a report showed U.S. employers hired more workers last month than economists expected.
The S&P 500 was down 0.5% in early trading, though it remains on pace for its best week since April. It had jumped at least 1.2% in each of the last four days, with the gains accelerating after results from Tuesday's election indicated control of Congress may remain split between Democrats and Republicans. That raised investors' expectations that business-friendly policies may stick around, regardless of who wins the presidency.
The Dow Jones Industrial Average was down 151 points, or 0.5%, at 28,238, as of 9:50 a.m. Eastern time, and the Nasdaq composite was down 1%.
The yield on the 10-year Treasury climbed to 0.82% from 0.78% late Thursday after the U.S. government said employers added 638,000 jobs last month. The stronger-than-expected tally suggests the economic recovery may still be intact, though it also marked another slowdown in monthly job growth.
The rally helped the 10-year Treasury yield claw back some of its recent slide. It had been above 0.90% earlier this week when expectations were rising that a Democratic sweep of Tuesday's elections could open the door for a big stimulus effort for the economy.
Electoral results so far, though, have nearly eliminated prospects for such a "blue wave." Democrat Joe Biden looks to be closing in on the presidency, with votes still being counted in several key states, but Republicans held onto several seats in the Senate that were considered vulnerable.
The upside of that for markets is that gridlock may prevent Democrats from approving some of the measures investors feared, such as higher tax rates and tougher antitrust policies for big technology companies. But the downside is that a still-divided Washington makes any support package for the economy coming from Congress likely to be less generous than if Democrats had swept the election.
Investors and economists say the economy needs such stimulus, particularly when the country's new coronavirus cases are setting records once again. Europe is also facing a troubling rise in infections, and governments there have already brought back restrictions on businesses in hopes of slowing the spread.
Even if the strictest lockdowns don't return in the United States, the worry is that the worsening pandemic will scare consumers by itself and erase profits for businesses.
Another risk for the market is that of a contested election for the presidency. Markets see cause for optimism if either Biden or President Donald Trump wins, and what investors want more than anything is for a clear winner to emerge.
Biden appears to be closing in on the needed electoral votes to win the presidency, but Trump took to the White House briefing room on Thursday evening to launch a litany of claims, without proof, about how Democrats were trying to unfairly deprive him of a second term.
His campaign has already filed legal challenges in several states, though most are small in scale and don't appear to affect many votes. If the election drags on through court challenges, the resulting rise in uncertainty could send stocks spinning, analysts say.
In European stock markets, France's CAC 40 fell 0.4% and Germany's DAX lost 0.6%. The FTSE 100 in London rose 0.4%.
In Asia, Japan's Nikkei 225 rose 0.9%, South Korea's Kospi added 0.1% and Hong Kong's Hang Seng edged up 0.1%. Stocks in Shanghai slipped 0.2%.