U.S. employers added just 29,000 jobs in September, falling short of expectations and driving the Nasdaq Composite to a record high as weaker labor data cooled expectations for a Federal Reserve interest rate hike.
Financial markets rallied on Friday after the Labor Department reported that nonfarm payrolls increased by 29,000 last month sharply below economists’ 90,000 estimate. Job growth for August was revised down to 133,000 from a previously reported 162,000 surge, and payroll figures for the previous two months underwent downward revisions.
Traders priced in lower odds of an October rate increase from the Federal Reserve, which had raised rates the previous month for the first time since 2023. Money markets priced in less than a 25% chance of an October Fed rate hike down from 26% before the latest data.
Wall Street Rallies As Tech Stocks Surge
The Nasdaq Composite gained 447.84 points, or 1.66%, to 27,319.43, hitting a record high as major U.S. stock indices advanced following the employment release.
Nvidia climbed 2.5% to an intraday record, the Philadelphia Semiconductor Index added 3.1%, SpaceX rose 5.5%, Tesla advanced 4.1%, and Oracle gained 3% as semiconductor stocks and megacap technology companies led the advance. Tempered rate-hike expectations bolstered rate-sensitive sectors, pushing the S&P 500 real estate index up 0.4% and lifting the small-cap Russell 2000 index by 0.9%.
The lower jobs print, including the revision, is, oddly enough, good news for stocks.
Todd Schoenberger, chief investment officer at CrossCheck Management
Treasury Yields Rise Despite Weaker Payrolls
The yield on benchmark 10-year notes rose 4.72 basis points to 5.281% after U.S. Treasury yields initially dropped in response to the weaker payroll figures and subsequently reversed course as some investors concluded the data was not weak enough to eliminate the possibility of further Fed tightening in the coming months. Dallas Fed President Lorie Logan added to the hawkish sentiment by calling for short-term borrowing costs to rise by at least another 50 basis points.
Global equities advanced 0.6% to 1,140.27 points.
Asian Markets Rise on Regional Tech Gains
Japan’s Nikkei 225 jumped 2.6% to 70,074, crossing the 70,000 threshold for the first time in three months as Asian shares advanced in Monday trade following the Wall Street lead, though markets in mainland China and South Korea remained closed for holidays. Investors targeted chip-related equities, and Japanese financial groups also advanced, with Mitsubishi UFJ Financial and Sumitomo Mitsui Financial both rising about 2%.
Nippon Paint shares climbed 1% after agreeing to acquire Akzo Nobel’s Southeast Asian unit in a deal valued at $1.35 billion. In Australia, the S&P/ASX 200 edged up 0.3%, supported by CSL committing up to $1.6 billion to jointly develop an experimental treatment for rare kidney and liver diseases, and Macmahon Holdings securing a $98 million contract extension at the Daisy Milano Gold Mine.
Hong Kong’s Hang Seng Index registered a 0.28% gain to close at 24,040.34, as technology sector gains managed to outweigh selling pressure directed at financial and property issues that remain sensitive to interest rates. New Zealand’s benchmark S&P/NZX-50 index increased by 0.14% to 13,699.02, successfully breaking a two-session losing streak.