U.S. employers added just 29,000 jobs in September, far short of forecasts, sending Treasury yields swinging before they reversed higher. The S&P 500 closed Friday up 0.7% even as the labor miss raised the odds the Federal Reserve holds rates steady this month.
Payrolls miss triggers a reversal
Nonfarm payrolls rose by just 29,000 in September, well below the 84,000 gain economists surveyed by Dow Jones had expected. The unemployment rate climbed to 4.2% from 4.1%, and the Bureau of Labor Statistics revised August's job gain down to 133,000.
Treasury yields initially fell on the data but reversed course during the session. The 10-year yield fell 8 basis points to 5.155% before erasing that drop, while the 2-year yield turned sharply higher to settle at 4.823% after an 8.4-basis-point intraday decline. "I still think the trajectory from here is higher for longer," said Timothy Chubb, chief investment officer at Girard Advisory Services, according to CNBC.
Stocks close higher despite the yield reversal
Equities shrugged off the back-and-forth in bond markets. The S&P 500 rose 0.7%, the Nasdaq Composite gained 1.2%, and the Dow Jones Industrial Average added 0.5% on Friday. The Nasdaq's advance came as Nvidia climbed to a record and semiconductor stocks rallied following Micron Technology's results.
Even so, the broader week told a different story. Over the five trading days, the Dow lost 1.3% while the S&P 500 fell 0.3%, weighed down by a bond-market rout and oil prices trading near $100 a barrel.
Fed odds split by meeting
Traders now see a 77% chance the Federal Reserve holds rates steady at its October meeting, according to the CME Group's FedWatch tool. The same tool put the odds of a quarter-point hike in December at almost 87%, which would lift the benchmark rate from its current 3.75%-4% range.
Oil prices also eased on Friday after reports that the European Union is weighing a release of strategic fuel reserves. With little on next week's economic calendar, investors remain focused on the same two forces that buffeted the market this month: oil prices and Treasury yields.
Sources: CNBC, MarketWatch, CNBC
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