Closing Bell: Stocks Rally as Weak Jobs Report Cuts Fed Hike Odds

U.S. stocks rallied Friday after a much weaker-than-expected September employment report supported equities on reduced expectations for an October Federal Reserve rate hike. 

Technology and semiconductor shares led the advance, with the tech-heavy Nasdaq-100 (/NDX) up 1.00%. The S&P 500 (SPX) gained 0.73% and the Dow Jones Industrial Average ($DJI) advanced 0.49% and the Russell 2000 (RUT) climbed 0.94%. 

The weak jobs report sent the probability of an October rate hike to below 25% Friday from 70% on Monday, according to the CME FedWatch tool. Investors weighed still-elevated inflation risks, heavy Treasury supply, the yield term-premium demanded for longer-dated bonds, and the possibility that the labor slowdown was not severe enough to force the Fed into rapid easing. The 10-year Treasury yield closed out the week at 5.277%. 

Five Things to Watch from Friday’s Market:  

Soft Hiring? Just 29,000 September Jobs Added 

The U.S. non-farm payrolls number for September was well below the 89,000-90,000 expected, while prior months were revised sharply lower. July payrolls were cut from +21,000 to -10,000 and August was revised from +162,000 to +133,000, a combined downward revision of 60,000 jobs. Including September’s gain, the economy added just 152,000 jobs over the past three months, or an average of roughly 51,000 per month. The unemployment rate rose to 4.2% from 4.1%, supporting signs of cooling labor-market momentum, which is what contributed to lower expectations for another rate hike in October. See Brusuelas: Weak September Jobs Report Will Force Fed to Hold Interest Rates and Is the Jobs Report a Goldilocks Moment for the Fed? | The Watch List 

Nvidia Hits New All-Time High 

Morgan Stanley reinstated Nvidia (NVDA) as its "top pick" in semiconductors. The firm cited the diversity of Nvidia’s customer base, growth within traditional hyperscale and frontier labs and its strategy to drive use of Nvidia solutions to drive token use and revenue per gigawatt (GW). Nvidia shares rose to an all-time high intraday Friday of $237.88 and settled up 1.34%. See Why the AI Trade Can Outlast Rising Borrowing Costs | Trading 360  

Hard-Drive Stocks Sink 

Seagate Technology (STX) and Western Digital (WDC) each fell roughly 10% after Toshiba disclosed plans to double hard-disk-drive production capacity for AI data-center demand. The announcement raised concerns that additional supply could pressure pricing and margins across the storage industry, making the two stocks notable laggards despite the broader market rally.  

Tesla Jumps on Vehicle Delivery Beat 

Tesla (TSLA) gained 4.65% after reporting 486,532 third-quarter vehicle deliveries, beating Wall Street expectations near 462,000 despite deliveries declining about 2% from a year earlier. Model 3 and Model Y accounted for 478,237 deliveries. Kevin Hincks Breaks Down September Jobs, NKE Earnings & TSLA 3Q Deliveries 

Nike Slides on Weak Outlook, Drop in China Sales 

Nike (NKE) shares sank 3.64% after reporting quarterly sales that missed expectations after the bell Thursday. Management also forecast a high-single-digit decline in fiscal year revenue. China sales dropped 26%, while the company announced additional job cuts and a restructuring designed to generate roughly $2.5 billion in savings through fiscal 2031. See NKE Taps 13-Year Lows After Earnings: Can Company Step Up Turnaround Story?  

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