Wall Street finished higher on Friday after a weaker-than-expected September jobs report calmed worries that a hot economy could push inflation, and interest rates, even higher. The Nasdaq Composite led the way with a record close, while the S&P 500 finished within about 1% of its all-time high. Falling Treasury yields and lower oil prices added to the relief, and artificial intelligence stocks once again drew buyers.
What Moved Markets
The Dow Jones Industrial Average gained 258.25 points, or 0.51%, to close at 51,184.81. The S&P 500 rose 56.27 points, or 0.73%, to 7,722.72. The Nasdaq Composite climbed 319.27 points, or 1.19%, to 27,190.86.
The catalyst was the government’s jobs report, which showed employers added just 29,000 jobs in September, well short of the roughly 84,000 economists expected and down from 133,000 in August. The unemployment rate edged up to 4.2% from 4.1%. Bad news for workers can be good news for markets right now, because it lowers the odds that the Federal Reserve will raise interest rates again. The Fed recently raised rates for the first time in three years to fight inflation. According to CME Group data, traders now see only about an 18% to 21% chance of another hike at the October 27-28 meeting, down from 64% a week ago.
Treasury yields eased as a result. The 10-year yield pulled back from near 5.35% on Thursday, which was close to its highest level in two decades, though it remained above 5.2% during the day. Lower yields tend to help stocks because borrowing gets cheaper and future profits look more valuable. Oil also slipped, with Brent crude trading near $100 a barrel, after the G7 agreed to coordinate a release of 100 million barrels of oil and fuel products from emergency reserves amid disruptions tied to the war with Iran.
Notable Movers
Nvidia (NVDA) rose about 1.9% and was the biggest single contributor to the S&P 500’s gain, after hitting a new all-time high earlier in the session that pushed its market value above $5.7 trillion.
Tesla (TSLA) jumped roughly 5% after reporting third-quarter deliveries of 486,532 vehicles, ahead of the 463,000 analysts had expected.
Nike (NKE) fell about 5% to 6%. The company beat profit expectations for its latest quarter, but revenue was weaker than feared and its profit forecast for the fiscal year came in below analyst estimates.
Synaptics (SYNA) surged about 14% after ON Semiconductor (ON) changed its acquisition offer from an all-stock deal to an all-cash deal valued at $123 per share. ON Semiconductor shares also rose.
Seagate (STX) dropped more than 11% and Western Digital (WDC) fell about 12% after a report that Toshiba plans to double its hard disk drive production capacity, raising concerns about a future supply glut.
Looking Ahead
Investors will turn next to the September inflation reports, the Consumer Price Index and Producer Price Index, which are likely to heavily influence the Fed’s late-October decision. Developments in the Iran conflict and energy prices will also stay in focus, along with the bond market, where sharp moves in yields have rattled stocks in recent weeks. On the corporate front, the Paramount Skydance and Warner Bros. Discovery merger is expected to close on October 6, and Tesla reports third-quarter earnings on October 21. As always, a single day’s rally does not guarantee a trend, so it can pay to stay diversified and focus on your long-term plan.