Wall Street up on Friday: Nasdaq at a record after weak jobs report softens expectations of a Fed rate hike

US stocks were up during Friday trading, with the Nasdaq index reaching a record level, after the weak September jobs report softened market expectations of a new interest rate hike by the Federal Reserve.

During Friday’s session, on 2 October, the Dow Jones rose by about 0.8%, or 385 points, the S&P 500 index advanced by about 1%, while the Nasdaq gained 1.2–1.4%, marking its highest level of all time. The rise was led by technology stocks and chipmakers — SpaceX climbed 6%, while ASML rose 3%, as Investopedia reports.

The Labor Department’s report, published on Friday morning, showed that the US economy added only 29,000 jobs in September, well below analysts’ expectations of about 84,000–90,000. The unemployment rate climbed to 4.2%, while wage growth was only 0.1% on a monthly basis and 3% on an annual basis — the lowest level since May 2021. Moreover, the July and August figures were revised down by 60,000 jobs in total.

The bond market reacted immediately: the 10-year Treasury yield fell to about 5.2%, from the 24-year high of about 5.35% it touched on Thursday, while the two-year yield dropped to about 4.76%, according to Barron’s. Falling yields make financing cheaper and reduce pressure on stock valuations, especially those of technology companies.

Investors are now betting that the Federal Reserve will pull back from further monetary escalation: according to the CME FedWatch tool, traders give only an 18–21% chance of a rate hike at the 27–28 October meeting, compared with 64% a week earlier, as The Wall Street Journal writes.

It is worth noting that the jobs report itself was also reflected earlier in the day in a separate newsroom article; this article deals with the reaction of the financial markets, a new development that came after the publication of the figures.

Analysts warn, however, that the euphoria may be temporary: if inflation continues to remain high, the Fed may keep a hawkish tone, while any further revision of the employment data will be kept under strict watch by investors.