(Bloomberg) -- U.S. stocks fluctuated as investors scrutinized data showing a slowdown in jobs growth for clues on the pace of Federal Reserve stimulus cuts.

Gap Inc. rose 0.6% after the retailer said annual profit may reach the upper end of its forecast. Abercrombie & Fitch Co. surged 12% after increasing its full-year earnings prediction. Alcoa Inc. dropped 6.6% after posting fourth-quarter profit that missed analysts’ estimates.

The Standard & Poor’s 500 Index fell 0.1% to 1,836.13 at 10:03 a.m. in New York, reversing an earlier advance of 0.3%. The S&P 500 has dropped 0.6% so far in 2014 after climbing 30% last year, the most since 1997. The Dow Jones Industrial Average lost 17.60 points, or 0.1%, to 16,427.16 today. Trading in S&P 500 stocks was 23% above the 30-day average at this time of day.

“The markets have been priced for everything to go perfect,” Ron Florance, the Scottsdale, Arizona-based deputy chief investment officer for Wells Fargo Private Bank, which oversees $170 billion, said by phone. “This number shows us that it’s not going to be perfect. We’re still on the trajectory of recovery, but I would expect heightened volatility.”

The 74,000 gain in payrolls, less than the most pessimistic projection in a Bloomberg survey, followed a revised 241,000 advance the prior month, Labor Department figures showed today in Washington. The median forecast of 90 economists called for an increase of 197,000. The unemployment rate dropped to 6.7%, the lowest since October 2008, as more people left the labor force.

FED STIMULUS

The Fed, which next meets Jan. 28-29, in December announced a reduction of $10 billion in its monthly bond-buying program to $75 billion, citing a recovery in the labor market. Three rounds of stimulus from the central bank have helped push the S&P 500 higher by 172% from a 12-year low in 2009.

At the central bank’s December meeting, some members of the Federal Open Market Committee “expressed the view that the criterion of substantial improvement in the outlook for the labor market was likely to be met in the coming year if the economy evolved as expected,” meeting minutes showed Jan. 8.

“As we’ve gotten to the New Year, there’s been a question about whether or not we’ve transitioned into good news being good news and bad news being bad news,” said Quincy Krosby, a market strategist for Newark, New Jersey-based Prudential Financial Inc. “We’ll test that today.”

The S&P 500 trades at 15.5 times estimated earnings of its members, more than the average multiple of 14.1 over the last five years, data compiled by Bloomberg show. Earnings for companies in the S&P 500 will climb 9.7% on average this year, almost twice the rate of 2013, while sales will probably increase 3.8%, according to analyst estimates compiled by Bloomberg.

EARNINGS EXPECTATIONS

“Earnings expectations are quite ambitious this year so we have to see if these come through,” said Virginie Robert, co- founder and partner at Constance Associes in Paris. Her firm, founded in August 2013, oversees three mutual funds including one that tracks the S&P 500 Total Return Index. “The fourth quarter will probably be quite disparate. You can see that retailers who have done well with online sales are reporting better holiday results, but others probably had a terrible quarter.”

JPMorgan Chase & Co., Bank of America Corp. and Goldman Sachs Group Inc. will all report quarterly results next week.

Gap, which rallied 26% in 2013, added 0.6% to $39.64. Full-year earnings-per-share will probably be at the high-end of a $2.57 to $2.65 range forecast in November, Gap said in a statement.

Abercrombie & Fitch, which will post full-year results on Feb. 26, jumped 12% to $37.16. The teen-clothing retailer said adjusted EPS will be between $1.55 and $1.65 for its full financial year, up from a previous range of $1.40-$1.50 reaffirmed on Nov. 21.

ALCOA SLIPS

Alcoa dropped 6.6% to $9.99. Profit excluding a $1.7 billion goodwill impairment and other one-time items was 4 cents a share, trailing the 6-cent average estimate compiled by Bloomberg. The largest U.S. aluminum producer said profit at its rolled metal unit fell 73% from a year earlier to $21 million.

Sears Holdings Corp. tumbled 16% to $35.80. The retailer said it will post a fourth-quarter loss of $250 million to $360 million, or $2.35 to $3.39 a share. Sales for stores open at least a year fell 7.4% in the current quarter through Jan. 6, according to a statement.

Five Below Inc. sank 6.2% to $40.89. The chain that sells teens discounted items said fourth-quarter adjusted EPS will probably not exceed 46 cents, down from an earlier range of 49 cents to 51 cents forecast in December, after holiday sales fell. Analysts on average had predicted earnings of 51 cents a share for the period.

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