Stocks rose on Friday, coming back from losses after a stronger-than-forecast US jobs report boosted expectations that the Federal Reserve will hike interest rates again.
The Dow Jones Industrial Average (^DJI) was up 0.1%, or about 50 points, as all the major stock gauges emerged from the red. The S&P 500 (^GSPC) hovered above the flatline, while the tech-heavy Nasdaq Composite (^IXIC) gained around 0.4%.
The September jobs data did not show the signs of cooling in the labor market that were forecast. The US economy added 336,000 jobs in September, almost twice the number expected. That could give the Fed more evidence that the labor market remains strong, making the case for a more restrictive policy for longer.
Friday’s data is the last key payrolls report before the central bank’s next policy meeting.
Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards
The Fed is also watching the bond markets, as Fed official Mary Daly said Thursday that if long-term bond yields remain around current levels, then policymakers may not need to raise interest rates again. The rally in yields continued Friday after the jobs print, with 10-year US Treasury yields (^TNX) going back up past 4.8%.
The bond sell-off may well continue, given there’s no clear catalyst to stem the bleeding, according to some analysts. It would take a washout in stocks or softening in the economy to prompt a retreat in yields, they believe.
Worries about growth have weighed on oil prices, which are set for their biggest weekly loss since March thanks to a clouded demand outlook. WTI crude oil futures (CL=F) wavered around $82 a barrel on Friday, while Brent crude futures (BZ=F) kept hold of the key $84 level.
Stocks trending in morning trading
Here are some of the stocks leading Yahoo Finance’s trending tickers page in morning trading on Friday:
Pioneer Natural Resources (PXD): Shares of the shale producer surged more than 10% Friday morning after reports that oil giant Exxon Mobil was finalizing a blockbuster deal to acquire it, worth about $60 billion.
Levi Strauss (LEVI): After reporting that revenue fell short of expectations and cutting its full-year sales guidance, the clothing company fell 0.83%.
Taiwan Semiconductor (TSM): Shares rose more than 1% after the company reported a smaller-than-expected decline in revenue, boosted by demand for AI and other advanced chips. Taiwan Semiconductor produces chips for Apple, Nvidia and other tech companies.
Tesla (TSLA): Shares in Tesla fell over 2% Friday morning after the company again cut prices of its Model 3 compact sedan and the Model Y SUV. The US Securities and Exchange Commission is also suing the company’s chief executive, Elon Musk , to compel him to testify over his actions surrounding the purchase of Twitter, now called X.
Stunning jobs report bolsters the ‘higher for longer’ stance at the Fed
The blockbuster September jobs report released on Friday came in nearly double the figure that economists had predicted. The muscular reading offered yet another data point showing the economy is more resilient than many had expected, even in the face of an aggressive tightening campaign by the Federal Reserve.
Experts say the strong labor market bolsters the case for the Fed to increase rates again, and further drives home the need for the central bank to maintain elevated rates for a longer period of time.
“Friday’s jobs report suggests that the labor report remains very strong and cements the case for an additional Fed rate hike this year, and it also likely delays the pace of eventual rate cuts,” said Robert Schein, chief investment officer at Blanke Schein Wealth Management. “Investors will need to get used to the higher for longer narrative on interest rates given the strength of the economy.”
The market is now predicting a greater likelihood the Fed will increase rates next month, according to the CME FedWatch Tool. Just a day before the jobs report, the forecast showed a 20% probability of a rate increase in November. That number jumped to nearly 30% on Friday.
Since job losses aren’t piling up as a consequence of the Fed’s prior rate hikes, some experts point to the increasing likelihood of a soft landing. “Resilient jobs growth shows there is some cushion for the Federal Reserve’s efforts to cool inflation without causing job losses,” said Daniel Zhao, Glassdoor’s lead economist. “‘As the labor market is in a resilient holding pattern, we’re one month closer to exiting 2023 without a recession.”
Stocks open lower after blockbuster jobs report
The first week of October headed for more losses after stocks sank at the opening bell on Friday. Investors recoiled after the newly released September jobs report showed the US economy added 336,000 jobs, shattering expectations that had called for 170,00 additions. The latest jobs data fueled concerns that the labor market isn’t slowing as fast as the Federal Reserve would like as it struggles to lower inflation.
The S&P 500 (^GSPC) lost 0.5%, while the Dow Jones Industrial Average (^DJI) decreased by about 0.3% or nearly 100 points. The tech-heavy Nasdaq Composite (^IXIC) gave up about 0.5%.
Tesla, Activision Blizzard, and Coca-Cola: Stocks trending in premarket trading
Here are some of the stocks leading Yahoo Finance’s trending tickers page in premarket trading on Friday:
Tesla (TSLA): Shares in Tesla fell over 2%. Tesla again cut prices of its Model 3 compact sedan and the Model Y SUV.
Activision Blizzard (ATVI): Activision’s shares rose almost 1% premarket. Reports said Microsoft is aiming to close its $69 billion deal for “Call of Duty” publisher Activision Blizzard on Oct. 13.
Coca-Cola (KO): Shares in Coca-Cola rose almost 1% premarket after the previous day’s drop. The fizzy drinks company’s shares have taken a hit amid focus on the impact of weight-loss drugs.
Nestlé (NESN.SW): Nestlé shares fell 3% on Friday. The food and drink maker’s shares were under pressure as investors weighed the potential impact of weight-loss drugs and how it could reduce spending on food.
The US labor market was so back in September
The US labor market added 336,000 jobs in September, nearly double the 170,000 expected by Wall Street economists and a sign the labor market’s resilience may continue to push the Federal Reserve to keep interest rates elevated or even raise rates further.
The unemployment rate in September was unchanged at 3.8% as labor participation remained steady from the prior month. A rise in participation pushed unemployment higher in August.
Wage growth slowed modestly in September, with average hourly earnings rising 4.2% over the prior year, less than the 4.3% that was expected, which would’ve matched the increase seen in August.
In the initial aftermath of this report odds the Fed raises rates next month rose to about 29% from 20% as of Thursday. We’ll keep a close eye on where these odds shake out over the coming weeks, and particularly ahead of inflation data due out next Thursday.
Stock futures rise with all eyes on US payrolls print
The major US stock indexes were poised to open higher on Friday, as investors waited for the release of the key US monthly jobs report that could set the tone for Federal Reserve policy.
Futures on the S&P 500 (^GSPC) were up 0.24%, while those on the Dow Jones Industrial Average (^DJI) gained 0.22%, or 74 points. Contracts on the tech-heavy Nasdaq 100 stepped 0.28% higher.
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