Key facts
- US stocks rose Friday following a weaker-than-expected jobs report.
- The Nasdaq Composite gained 1.2%, the S&P 500 rose 0.7%, and the Dow Jones Industrial Average increased 0.5%.
- US nonfarm payrolls increased by 29,000 in September, missing economists' forecasts.
- Expectations for a Federal Reserve rate hike in October decreased to 21%.
- Global bond yields continued to rise, reaching levels not seen in two decades.
- Benchmark 10-year U.S. Treasury yields rose 4.93 basis points to 5.283%.
Major stock indexes rose and the dollar fell on Friday as expectations for a Federal Reserve interest rate hike later this month decreased after softer-than-forecast U.S. jobs data. Yields, however, rose again, as the bond market resumed an ongoing sell-off that has seen global yields rise to levels not seen in two decades.
Nonfarm payrolls increased by 29,000 jobs last month, the U.S. Labor Department's closely watched employment report showed, short of the expected gain of 90,000 according to economists polled by Reuters. Job growth for August was revised down to 133,000 from a previously reported 162,000 surge.
Bets on an October rate rise from the Fed, which last month increased rates for the first time since 2023, faded after the data. Traders now see a roughly 21% chance that the Fed will hike rates by 25 basis points in October, compared with about 26% before the report. "It wasn't as hot a labor market print as August," said Joseph Purtell, senior vice president, portfolio manager and rates trader at Neuberger. He still described the labor market as largely stable, however.
Expectations for an October rate hike had already been declining going into Friday's jobs report. Two top policymakers said this week they wanted more data before deciding what to do next with interest rates. Odds of a December hike initially fell following the data but then increased, according to LSEG.
The Nasdaq composite was 1.2% higher, leading Wall Street, as it gained 319.27 points to 27,190.86. The Dow Jones Industrial Average rose 250.40 points, or 0.5%, to 51,176.96, and the S&P 500 rose 56.27 points, or 0.7%, to 7,722.72. MSCI's gauge of stocks across the globe rose 7.01 points, or 0.6%, to 1,140.27. The pan-European STOXX 600 index rose 0.75%.
The dollar was down against the euro and yen. The euro was last up 0.16% at $1.1259. Against the yen, the dollar weakened 0.18% to 157.79.
U.S. Treasury yields initially lost ground following the jobs data, but were later higher on the day, with some investors noting that the jobs report was not so weak that it removed chances for the Fed to raise rates in coming months. Global bond markets have been steadily selling off in recent weeks as the U.S.-Israeli war with Iran pushed up energy prices, complicating the inflation outlook and further straining already stretched public finances. Benchmark 10-year U.S. yields closed September with their largest quarterly rise since 1994. The yield on benchmark U.S. 10-year notes was last up 4.93 basis points at 5.283%. The 2-year note yield, which typically moves in step with interest rate expectations for the Fed, was up 4.6 basis points at 4.833%.
Trading on Friday remained volatile in European government bond markets, with the gap between the German and French 10-year yields hitting the widest level since the euro zone debt crisis in 2011. German 2-year bond yields were last flat at 3.05%, having swung between session lows of 2.943% and highs of 3.063%, while French 2-year yields were around 4 basis points higher at 3.73%, having risen to as much as 3.84% earlier. Italian 2-year yields were down 7 basis points at 3.547%.
Brent crude futures climbed while U.S. West Texas Intermediate held on to a portion of earlier losses after European leaders agreed to U.S. President Donald Trump's request to release diesel reserves. Brent was last up 46 cents, or 0.45%, at $102.77 a barrel at 2:20 p.m. EDT. WTI was down 1% to $91.90 a barrel.