Stocks close higher, Nasdaq up 1.2%, as the 2-year yield rises 5 basis points despite a 29,000 jobs print
A weak September payrolls report pushed October hike odds down and tech stocks up, but Treasury yields reversed higher. The Dow and S&P 500 still finished the week lower.
Stocks rose on Friday after the September jobs report came in far weaker than expected. The S&P 500 gained 56.27 points, or 0.73%, to 7,722.72, and the Nasdaq Composite climbed 1.19% to 27,190.86 after touching a record during the session, CNBC reported. The Dow Jones Industrial Average added 0.49% and the Russell 2000 rose 0.94%, according to Yahoo Finance closing data.
| Index | Close | Day | Week |
|---|---|---|---|
| S&P 500 | 7,722.72 | +0.73% | -0.27% |
| Nasdaq Composite | 27,190.86 | +1.19% | +0.45% |
| Dow Jones Industrial Average | 51,176.96 | +0.49% | -1.26% |
| Russell 2000 | 2,832.90 | +0.94% | -0.16% |
The rally did not rescue the week. The Dow fell 1.26% from last Friday's close and the S&P 500 slipped 0.27%, leaving the Nasdaq as the only major average with a weekly gain. CNBC noted it was the Dow's fourth losing week in five.
The jobs miss, and why bonds shrugged it off
Payrolls rose 29,000 in September against a Dow Jones consensus of 84,000, and unemployment ticked up to 4.2% (our jobs report story). Revisions cut July to a loss of 10,000 and August to 133,000. CNBC said fed funds futures put the chance of a hold at the Fed's October 27-28 meeting at 77% on the CME FedWatch tool.
The bond market is where the day got interesting. Yields fell on the release and then climbed back. Treasury's official curve has the 2-year closing at 4.83%, up 5 basis points, the 10-year at 5.28%, up 4, and the 30-year at 5.63%, up 2. CNBC's yields report said traders still see a strong chance of a December hike.
That is the number behind the rally. A soft jobs report normally pulls the 2-year down, and Friday it went up. At 4.83%, the 2-year sits about 95 basis points above the 3.88% fed funds rate on our markets board, which says the market still expects tightening, just not this month. For a business owner with a credit line priced off prime, Friday changed the timing of the risk, not the direction. Over the week, the 10-year rose 11 basis points from 5.17% and the 30-year 14 basis points from 5.49%, while the 2-year rose only 2. Long-term borrowing, including mortgages and fixed-rate equipment loans, took the bigger hit (chart: 10-year T-note; more in our 10-year story).
Sectors, oil and movers
Consumer discretionary led the SPDR sector funds, up 1.13%, followed by technology at 1.01% and industrials at 0.78%. Health care was flat and financials rose 0.06%. Front-month WTI crude futures ended at $91.52, down 1.5%, after CNBC cited a report that European governments are weighing a release of strategic fuel reserves. Gold futures fell 0.7% to $4,171.80.
Seagate and Western Digital each closed down about 10.2% after Nikkei reported Toshiba plans to double its hard-drive capacity for data centers (our story). Tesla rose 4.65% after third-quarter deliveries of 486,532 beat estimates (our story). Nike fell 3.64% after its fiscal first-quarter report and a forecast of a high-single-digit revenue decline for 2027 (our story). AMD gained 2.95%, Palo Alto Networks 1.76% and CrowdStrike 1.48%. Nvidia hit an intraday record of $237.88 but closed at $233.95, up 1.34%.
Next week
Our calendar has the ISM services index on Monday, forecast at 55 against 55.4 previously, and weekly jobless claims on Thursday, forecast at 200,000. September CPI follows on October 14, two weeks before the Fed meets.
Sources: CNBC, U.S. Treasury, Yahoo Finance, Chronicle markets board. Sector moves use SPDR sector fund closes. This is market information, not investment advice.
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