October’s first trading week ended with a twist after Wall Street reversed earlier losses on Friday and surged to the closing bell as investors digested a strong jobs report that blew away expectations.
The S&P 500 (^GSPC) gained about 1.2%, while the Dow Jones Industrial Average (^DJI) climbed roughly 0.9% or about 290 points. The tech-heavy Nasdaq Composite (^IXIC) rose 1.6%.
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.
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 $83 a barrel on Friday, while Brent crude futures (BZ=F) kept hold of the key $84 level.
