U.S. equities closed sharply higher on Friday, buoyed by a softer-than-expected September employment report that diminished the likelihood of a Federal Reserve interest rate increase at its upcoming October meeting. The Dow Jones Industrial Average surged 324 points, while the S&P 500 advanced 0.79% and the Nasdaq Composite climbed 1.21%.
The Labor Department's latest data revealed that the U.S. economy added only 29,000 jobs in September, a sharp deceleration from the downwardly revised 133,000 gain in August. Economists surveyed by Reuters had anticipated a rise of 90,000 positions. The unemployment rate also ticked up to 4.2%, against expectations that it would hold steady at 4.1%.
This report adds to a series of recent economic indicators that have shaped market expectations for the Fed's next policy move. Following the release, Treasury yields declined, with the 10-year yield falling more than four basis points to 5.20%. The two-year yield, which is closely tied to Fed rate expectations, also dropped for a second consecutive session.
According to CME FedWatch data, market participants now price in a 16% probability of a 25-basis-point rate hike in October, down from 26% prior to the jobs report. Conversely, the odds of the central bank holding rates steady this month rose to 86%, up from roughly 76% a day earlier. Expectations for an October hike had already weakened following recent inflation data that came in below forecasts, as well as comments from Fed officials suggesting the central bank could afford to wait before tightening further.
The decline in Treasury yields followed a rebound in the bond market on Thursday, which came after a selloff earlier in the week pushed the benchmark 10-year yield to multi-decade highs. Despite Friday's gains, the S&P 500 was on track for a weekly decline of about 1%, while the Dow was heading for a 1.7% weekly loss.
Technology and semiconductor stocks led the advance. Nvidia shares rose 2.15%, while Broadcom and Advanced Micro Devices gained approximately 1.56% and 3%, respectively. Amazon and Tesla each advanced more than 1.8% and 3.8%, respectively. The broader market also received support from lower oil prices, with Brent crude falling below $100 a barrel after reports that European countries discussed releasing additional diesel and crude stockpiles. Oil prices had previously risen amid concerns over fuel supplies and tensions surrounding the Middle East conflict. Lower oil prices could ease some of the inflation pressure that has complicated the Federal Reserve's policy outlook.
Several individual stocks saw notable moves. Nike shares fell 6.3% after the company forecast a significant annual revenue decline, citing weakness in China, while also announcing job cuts and changes to its global business structure. Fair Isaac dropped 5.8% following a report that the U.S. Federal Housing Finance Agency plans to ease mortgage credit data requirements for Fannie Mae and Freddie Mac.
In the cryptocurrency space, Bitcoin rose 4%, while Coinbase and Strategy gained about 5% each, reflecting the broader improvement in risk sentiment.
This article is for informational purposes only and does not constitute financial advice.
