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Stocks mixed after jobs report; Italian referendum looms

The Dow Jones industrial average traded just below the flatline, with IBM and Goldman Sachs contributing the most losses. The S&P 500 held around 0.25 percent in choppy trade, with real estate rallying almost 1.4 percent to lead advancers. The Nasdaq composite also gained about 0.25 percent as tech stocks rebounded.

US stocks traded mixed on Friday as investors digested a stronger-than-expected jobs report while bracing themselves for a key constitutional referendum in Italy.

The Dow Jones industrial average traded just below the flatline, with IBM and Goldman Sachs contributing the most losses. The S&P 500 held around 0.25 percent in choppy trade, with real estate rallying almost 1.4 percent to lead advancers. The Nasdaq composite also gained about 0.25 percent as tech stocks rebounded.

The US economy added 178,000 jobs last month, the Labor Department said, with the unemployment rate falling to 4.6 percent. Economists polled by Reuters expected a gain of 175,000 with the unemployment rate holding steady at 4.9 percent. Wages, however, slumped to 2.5 percent.

"This relatively strong number may also increase expectations of the pace of rate hikes next year. Market reaction to this morning's labor report was muted which shows investors had already priced in the increase in payrolls and drop in the unemployment rate," said Chris Gaffney, president of world markets at EverBank.

Most market participants are expecting the Federal Reserve to raise interest rates on Dec. 14. According to the CME Group's FedWatch tool, market expectations for a December rate hike were above 90 percent.

Phil Orlando, chief equity strategist at Federated Investors, said that, while Friday's jobs data will not deter the central bank from raising rates, it was not a good report. "While the consensus was around 180,000 we had expected a number ," he said, noting the ADP report released Wednesday showed gains of more than 200,000 while weekly jobless claims remained around their lowest levels since the 1970s. He also said "the reason why the unemployment rate was so low is a bad one," citing a jump in discouraged workers.

Also on investors' radars was the Italian referendum, scheduled for Sunday. With this referendum, Italian Prime Minister Matteo Renzi wants to change the constitution so that the executive branch needs approval only from parliament's lower house in order to pass laws. Renzi thinks this change is so important to turn around Italy's lackluster economy that he has vowed to resign if the referendum is defeated.

"What we're seeing here is a cautious market because of the Italian referendum," said Peter Cardillo, chief market economist at First Standard Financial. "If Renzi resigns, that could bring political uncertainty, ... and that could bring an attack on the euro."

The European common currency traded slightly higher against the dollar, near USD 1.067. The greenback, meanwhile, traded about 0.25 percent lower against a basket of currencies, near 100.81.

European equities were under pressure on Friday, with the pan-European Stoxx 600 index falling around 0.4 percent and the German Dax sliding 0.14 percent.

In the U.S.. the S&P and Nasdaq were on track to snap three and four-week winning streaks, respectively, as a massive post-election rally slowed down. The small cap Russell 2000, which has outperformed the large indexes, was also on pace for a negative week. The Dow, however, was on track to post slight weekly gains.

"This week has been the realization of a few things. Post election, we've had euphoria about fiscal spending and deregulation. This week, however, we've seen the other side of