By Ryan Vlastelica
NEW YORK (Reuters) - U.S. stocks dipped in a volatile session on Friday that took the major indexes between gains and losses as a stronger-than-expected payrolls report was offset by weakness in energy and materials shares.
Employers added 171,000 people to their payrolls last month, the Labor Department said on Friday. The number exceeded forecasts, and the government also said 84,000 more jobs were created in August and September than initially estimated. Still, sustained job gains of this magnitude would only bring the unemployment rate down slowly.
"The report itself was good, but just not good enough, especially after the pre-rally we had yesterday," said Todd Schoenberger, managing principal at the BlackBay Group, in New York, referring to a 1.1-percent surge in the S&P 500 on Thursday, the index's best day since September 13.
The latest jobs report, which is the last one before the U.S. presidential election on Tuesday, could boost President Barack Obama's fortunes at the ballot box, though polls continue to indicate a close race between Obama and the Republican candidate, Mitt Romney.
"With the election next week, and the outcome of that still so uncertain, some modest downward pressure is to be expected for the rest of the day," Schoenberger said.
Materials shares were the day's weakest, with the S&P materials index <.GSPM> falling 1.2 percent. Newmont Mining Corp
The Dow Jones industrial average declined 35.94 points, or 0.27 percent, to 13,196.68. The Standard & Poor's 500 Index shed 2.14 points, or 0.15 percent, at 1,425.45. The Nasdaq Composite Index slipped 7.14 points, or 0.24 percent, to 3,012.92.
The S&P 500 was still on track for its best weekly gain since the week ended September 16, lifted by a rally Thursday, when the index enjoyed its best day in seven weeks, thanks to bullish consumer confidence and private-sector jobs data.
The current trading week has been shortened by a historic two-day market closure on Monday and Tuesday, spurred by the superstorm Sandy's devastating sweep through the U.S. Northeast.
The S&P 500 index is down more 2 percent from a recent peak in September, and is below its 50-day moving average, amid investor caution ahead of the election and tough government budget negotiations at the end of the year.
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From New York City's Staten Island to the popular beach towns of the Jersey Shore, rescuers and officials continued to face widespread destruction Friday wrought by Sandy, as well as a rising death toll and frustration over delayed relief and fuel shortages.