MARKET SNAPSHOT: U.S. Stocks Erase Losses; S&P 500 Above 2,000

By Sara Sjolin and Anora Mahmudova, MarketWatch

NEW YORK (MarketWatch)--U.S. stocks shrugged off earlier pessimism Friday after a weaker-than-expected jobs report with sessions gains trimming what would have been weekly losses.

A surprisingly weak jobs report indicated a marked slowdown in the labor market, however the initial reaction was muted, as investors appeared to focus on the idea that the creation of fewer new jobs than expected won't alter the Federal Reserve's thinking on interest rates.

Analysts also cautioned against putting too much weight on just one month's set of data.

The economy added 142,000 new jobs in August, the smallest gain since December and well below Wall Street expectations for 228,000.

Even so, "most indicators in the report were better than in July," said John Canally, investment strategist and economist at LPL Financial. "After the initial knee-jerk reaction, investors looked into the details and at implications and realized that this report was not a game-changer." .

But Uri Landesman, the president of Platinum Partners, a New York-based hedge fund, said the weak jobs numbers may indicate the recovery is stalling.

"In the short term, a few more weak data points may trigger a correction. The market is pricing in the good news but not a lot of bad news. From a technical standpoint, there is not much support in the S&P 500, as the index moved in a straight line up," Landesman said.

The S&P 500 (SPX) edged up 5 points, or 0.2%, to 2,002.79 with nine of 10 main sectors in positive territory. The Dow Jones Industrial Average (DJI) gained 39 points, or 0.2%, to 17,109.85. The Nasdaq Composite (RIXF) added 6 points, or 0.1%, to 4,568.30.

Away from jobs: NATO leaders finish their two-day meeting in Wales on Friday, where they have been working on a new set of sanctions against Moscow for supporting pro-Russia rebels in Ukraine. Speaking at the summit, British Prime Minister David Cameron said the U.K. would commit 3,500 troops to a new "spearhead" force to react to Russia's actions in Ukraine.

Meanwhile, Ukraine signed a cease-fire with pro-Russian rebels that took effect Friday evening local time.

Separately, President Barack Obama on Friday said the U.S. would work with Western allies and countries in the Mideast to develop a strong diplomatic and political effort to degrade and defeat the "savage" Islamic insurgent group known as ISIS.

Movers and shakers: Tesla Motors (TSLA) shares fell 3.2% as investors are pulling back after outsize gains made partially in anticipation of the electric vehicle manufacturer's decision on where to locate its battery factory.

Shares of Michael Kors Holdings Ltd. (KORS) slid after the company's biggest shareholder sold its stake overnight.

Quiksilver Inc. (ZQK) plunged 28% as the apparel retailer's third-quarter results missed analysts' estimates.

Gap Inc. (GPS) shares fell 4.64% after the apparel retailer reported disappointing sales for August. (Read more about the day's notable stock moves here: http://www.marketwatch.com/story/apple-shares-battered-el-pollo-loco-rallies-on-earnings-2014-09-05.)

Other markets: The euro (EURUSD) hovered around a 14-month low, following the ECB's easing measures announced on Thursday. European stock markets were mostly lower, while Asian bourses closed mixed.

Oil futures (CLV4) erased gains, while precious metals were little changed.

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