Weak Jobs Report Lifts Stocks as Fed Rate-Hike Fears Fade
NEW YORK — Wall Street got the weak jobs report it wanted Friday. Stocks climbed and bond yields retreated after the government reported the economy added just 29,000 jobs in September, far below expectations, cooling fears of another Federal Reserve rate hike.
The Nasdaq composite jumped more than 1% to a new all-time high. The S&P 500 rose 0.7% and the Dow Jones Industrial Average added about 0.3%, paring an early rally of more than 300 points.
Economists had expected roughly 84,000 new jobs. The unemployment rate ticked up to 4.2%, above the 4.1% forecast. The government also revised July and August hiring down by a combined 60,000 jobs, and average hourly earnings rose just 0.1%, below what Wall Street expected.
For markets, the softness was welcome news. Weaker hiring eases pressure on the Fed to raise rates at its late-October meeting. Traders now see roughly a one-in-five chance of a hike, down from nearly two-in-three just a week ago, according to CME FedWatch.
“This will reinforce the impact of recent Fedspeak in calming expectations about an October rate hike,” economist Mohamed El-Erian wrote.
The 10-year Treasury yield, which had touched a 24-year high near 5.35% the day before, slipped toward 5.16% after the report before drifting back near 5.25%. The yield is the benchmark behind mortgages, corporate borrowing and more, and its retreat is what stock investors wanted to see.
“We are seeing the tension between the goods-producing sectors that support the AI boom and the services-producing sectors that are feeling the impact of technological change,” said Jeffrey Roach, chief economist at LPL Financial. “Given the overall softness of the labor market, the likelihood of two Fed hikes is getting lower.”
Chip stocks led the advance. Hewlett Packard Enterprise jumped 7% and NetApp rose 5%, extending its winning streak to eight sessions. Tesla shares moved higher, while Nike slid after projecting a steeper sales decline than analysts expected.
Energy prices eased as well. U.S. crude fell 2.5% to about $90.50 a barrel on reports the European Union could release diesel stockpiles, with Brent crude near $99.50.
For borrowers, the day offered a hint of relief. Mortgage rates, which hit 7.28% this week on surging Treasury yields, could ease if yields keep cooling, though one report rarely settles the question for long. By afternoon, yields were already creeping back up, trimming the market’s early gains.
