Weak jobs report lifts stocks as bets on another Fed rate hike fade
Employers added just 29,000 jobs in September. The Nasdaq finished the week higher, but the S&P 500 and the Dow ended with losses.
Stocks rose Friday after a weak September jobs report led traders to drop bets on another Federal Reserve rate hike this month.
US stocks rose on Friday after a weaker-than-expected jobs report led traders to largely abandon bets that the Federal Reserve will raise interest rates again this month.
Employers added just 29,000 jobs in September, far below forecasts of roughly 84,000 to 90,000, and the unemployment rate rose to 4.2% from 4.1%.
The report matters because the Fed raised rates in September, citing inflation that "remained elevated." A slowing job market makes a second increase less likely, and traders' odds of an October hike fell from 64% to about 16% over the week, according to Yahoo Finance.
"There is zero chance for a rate hike in October now — in retrospect, September should have been a hold," Jamie Cox of Harris Financial Group told TheStreet.
The S&P 500 rose 0.73% on Friday to close at 7,722.72. The Nasdaq composite gained 1.19% to 27,190.86, and the Dow Jones Industrial Average added 0.49% to 51,176.96, according to AP.
The gains were not enough to rescue the week for two of the three major indexes. The S&P 500 slipped 0.3% for the week and the Dow fell 1.3%, while the Nasdaq rose 0.5%. The S&P 500 is up 12.8% for the year.
Wage growth also cooled. Average hourly earnings rose 0.1% in September to $37.81, a 3.0% increase from a year earlier and below the 3.4% inflation rate. Earlier months were revised down, with August cut to 133,000 new jobs and July to a loss of 10,000.
"The labor market remains resilient, but it is not accelerating. Hiring is subdued, layoffs remain remarkably low," Adam Schickling of Vanguard told Fox Business.
Bond yields remain high. The yield on the 10-year Treasury fell to about 5.18% right after the report but recovered to close near 5.28%, up almost a tenth of a percentage point for the week. The Fed's benchmark rate stands at 3.75% to 4%.
Among individual stocks, Tesla rose about 5% after reporting third-quarter deliveries that beat forecasts, and Nvidia touched a record high during the session. Nike fell about 5% after its revenue missed expectations. Western Digital and Seagate dropped sharply after Toshiba said it would expand hard-drive production.
Gold fell to about $4,162 an ounce and bitcoin slipped about 2%.
Investors will next watch September inflation data on October 14. The Fed announces its next rate decision on October 28.