A stronger-than-expected September jobs report provided a much-needed boost to Wall Street, effectively overshadowing the concerns that had been weighing on investors earlier in the week due to escalating geopolitical tensions in the Middle East. The U.S. economy added a remarkable 254,000 nonfarm payroll jobs in September, a significant leap from August’s 159,000 and surpassing forecasts of 140,000. This marked the most robust employment growth since March 2024, underscoring the resilience of the American job market.
Adding to the positive news, the unemployment rate dropped more than anticipated to 4.1%, while average hourly earnings also exceeded expectations. These figures point to a red-hot labor market, with businesses continuing to hire and workers seeing wage growth. The strong jobs report also had a noticeable impact on the financial markets. Small-cap stocks, which often benefit from a healthy economy, outpaced their large-cap counterparts as concerns about an economic slowdown subsided.
Traders quickly adjusted their outlook for the Federal Reserve’s upcoming November meeting. The probability of a 50-basis-point rate cut, which was initially estimated at 30%, plummeted to just 10% in the wake of the robust jobs data. This suggests that the Fed may not be as inclined to lower interest rates aggressively, given the current strength of the labor market.
U.S. Treasury yields responded sharply to the positive labor market data. The 2-year yield climbed by 20 basis points, while the 10-year yield increased by 12 basis points. This rise in yields reflects investor confidence in the economy’s ongoing strength.
The positive sentiment extended beyond U.S. markets. Chinese equities continued their upward trajectory, fueled by ongoing domestic stimulus measures aimed at boosting the Chinese economy. The iShares China Large-Cap ETF FXI reached levels last seen in February 2022, just before Russia’s invasion of Ukraine, signaling renewed optimism in the Chinese market.
Gold prices, often viewed as a safe-haven asset, dipped 0.3% as the U.S. dollar strengthened and bond yields climbed. This suggests that investors are shifting away from perceived safe havens and towards riskier assets, reflecting their confidence in the current economic environment.
Oil prices extended their rally for the fourth consecutive session, with WTI crude hitting $75 per barrel during intraday trading. This surge in oil prices is driven by a combination of factors, including continued global demand and supply constraints.
Bitcoin, the leading cryptocurrency, surged 2.2%, climbing to $62,000. The cryptocurrency market has been experiencing volatility in recent months, and the positive news from the jobs report seems to have injected optimism into the digital asset space.
Here’s a look at how major U.S. indices and ETFs performed on Friday:
*
Russell 2000:
2,203.80 (up 1.1%)*
Nasdaq 100:
19,932.47 (up 0.7%)*
S&P 500:
5,727.63 (up 0.5%)*
Dow Jones:
42,146.54 (up 0.3%)Among individual stocks, semiconductor stocks rallied, with Advanced Micro Devices Inc. (AMD) leading the gains, up over 4%. Rivian Automotive Inc. (RIVN) fell over 4% after missing quarterly revenue expectations. Spirit Airlines Inc. (SAVE) tumbled 26% amid bankruptcy discussions with creditors following the failed merger with JetBlue Airways Corp. (JBLU). Peers such as American Airlines Group Inc. (AAL) and United Airlines Holdings Inc. (UAL) rallied on the news, up by 5.4% and 3.6%, respectively.
