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U.S. stocks opened higher Friday, October 2, after a weaker-than-expected September jobs report eased market expectations of another Federal Reserve rate increase this month. Lower Treasury yields and a decline in oil prices added support as investors weighed the prospect of slower hiring against the risk that a still-resilient economy could keep inflation elevated.
At the opening bell, the Dow Jones Industrial Average rose 340.08 points, or 0.67%, to 51,266.64. The S&P 500 gained 0.89% to 7,734.72, and the Nasdaq Composite advanced 1.27% to 27,216.91, according to Reuters. Those are opening levels, not closing prices; trading was still underway when Reuters published its report.
Hiring falls short of forecasts
The Labor Department reported that U.S. nonfarm payroll employment increased by 29,000 in September, well below the 90,000 gain economists polled by Reuters had expected. The department described total payroll employment as having changed little during the month, following an average monthly increase of 45,000 over the previous 12 months.
The unemployment rate edged up to 4.2% from 4.1% in August. The report also revised July payrolls down from a previously reported gain of 21,000 to a decline of 10,000, and cut August’s increase from 162,000 to 133,000. Together, the revisions mean employment in those two months was 60,000 lower than previously estimated.
Hiring was subdued across most major industries, the Bureau of Labor Statistics said. Health care added 17,000 jobs, less than its average monthly gain of 33,000 over the prior year, while manufacturing employment increased by 9,000. Financial activities lost 7,000 jobs, and employment in many other sectors changed little.
Yields and rate expectations move lower
Investors focused on what the data might mean for the Fed’s next interest-rate decision. A softer employment reading can reduce concern that strong demand will add to inflation pressure, and Reuters reported that the report strengthened the market view that U.S. rates could remain unchanged this month. That shift helped push Treasury yields lower.
The yield on the benchmark 10-year Treasury was about 5.21% in early trading, down roughly 0.03 percentage point, according to market data displayed alongside Reuters’ report. The move followed a sharp rise in yields during the prior session, when concern about the strength of the economy and the path of inflation had weighed on bonds and stocks.
The response reflects competing risks rather than an unambiguously positive signal from the labor market. Lower yields can ease financing costs and make future corporate earnings more valuable in stock-market calculations, but slower hiring can also signal a weakening economy. Friday’s payroll gain was modest, while the unemployment rate remained relatively low and average hourly earnings continued to rise.
Pay growth and revisions temper the picture
Average hourly earnings for private-sector workers rose 0.1% in September, or 5 cents, to $37.81. Pay was up 3.0% over the preceding 12 months, the BLS said. The average workweek was unchanged at 34.4 hours, offering no indication of a broad monthly increase in hours worked.
The downward revisions to July and August add context to September’s weak headline, but the figures remain preliminary and can change as the BLS receives additional employer reports and recalculates seasonal factors. The agency said the revisions drew on new information from businesses and government agencies as well as updated seasonal adjustments.
Oil retreat adds another source of support
Lower oil prices also helped sentiment. Reuters reported that oil futures were down in early trading, while the Brent contract was around $100 a barrel on the market snapshot accompanying the story. A decline in energy prices can ease one source of inflation pressure, although oil prices remain exposed to geopolitical and supply developments.
The early rally followed a volatile week in bond markets, where rising yields had become a concern for equity investors. Friday’s initial gains were broad across the three major U.S. indexes, with the technology-heavy Nasdaq leading at the opening. The available reporting did not establish whether those gains would hold through the session.
Next data point is due in November
The September employment release was published at 8:30 a.m. Eastern on Friday. The next monthly Employment Situation report, covering October, is scheduled for November 6 at 8:30 a.m. Eastern, according to the BLS calendar. Until then, the September figures may be revised, and the Fed’s decision this month remains a separate policy judgment rather than an outcome determined by one jobs report.
