Stocks opened lower Friday as a sizzling September jobs report caused Treasury yields to jump. However, the main indexes didn't stay in negative territory for long as bargain hunters swooped in.
Taking a closer look at this morning's nonfarm payrolls data shows the U.S. added 336,000 new jobs in September, nearly double what economists were expecting. The unemployment rate held steady at 3.8%, while average hourly earnings – a measure of inflation that's tracked by the Federal Reserve – were up 4.2% year-over-year, the slowest annual pace since June 2021.
Wall Street's top minds were quick to weigh in after the September jobs report, including Matt Peron, director of research at Janus Henderson Investors. The report "will keep rates higher for longer and challenges the equity market soft-landing narrative as well as valuations," Peron says. "We're still forecasting a slowdown, but persistent strong data in the service economy is certainly nudging the risk to the downside due to the potential of more aggressive policy."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Rate hike expectations tick higher after jobs report
Indeed, the report muddies expectations of whether or not the Federal Reserve will raise interest rates again this year. According to CME Group, futures traders are pricing in a 29% chance for a quarter point rate hike at the next Fed meeting, up from 18% one week ago.
The data also sent Treasury yields spiking after two days of cooling off. The yield on the 2-year government bond jumped 6.7 basis points to 5.092%, while the yield on the 10-year note rose 8.1 basis points to 4.797%. (A basis point = 0.01%.)
Still, the main benchmarks managed to swing into positive territory mid-morning and they kept rising into the close. The Nasdaq Composite finished the session up 1.6% at 13,431, the S&P 500 was 1.2% higher at 4,307, and the Dow Jones Industrial Average added 0.9% to 33,407.
The two major events investors need to watch for
Looking ahead, there are two major events next week that could spark market volatility. One is Thursday morning's release of the September Consumer Price Index (CPI), one of the last major readings on inflation ahead of the Fed's November meeting.
BofA Securities economist Stephen Juneau thinks the September CPI will be "relatively firm," up 0.3% month-over-month – down from August's reading of 0.6%. The economist believes the monthly rise in core CPI, which excludes volatile energy and food prices, will stay unchanged at 0.3% amid a decline in used car prices.
Additionally, third-quarter earnings season gets underway, with air carrier Delta Air Lines (DAL) and big bank Wells Fargo (WFC) among those on the earnings calendar. Gina Bolvin, president of Bolvin Wealth Management Group, says she is expecting "a good earnings season and for long-term investors it may be a good opportunity to buy on dips."
Related content
-
You Don’t Want to Retire in Portugal: Here Are Three Tax Reasons WhyRetirement Taxes With the NHR benefit retiring and pension taxes increasing, you might rethink your retirement plans in Portugal.
-
Home Depot's Winning Ways Fueled Its 100,000% ReturnHome Depot's wide moat leaves little room for competition – and shareholders have profited as a result.
-
7 of Warren Buffett's Biggest MissesWarren Buffett's investing wins are highly regarded across Wall Street, but no one can bat a thousand. Here are some of Buffett's biggest misses.
-
Fed Leaves Rates Unchanged: What the Experts Are SayingFederal Reserve As widely expected, the Federal Open Market Committee took a 'wait-and-see' approach toward borrowing costs.
-
Stock Market Today: Dow Pops 703 Points on Cooler InflationA benign reading from the Consumer Price Index report assuaged market fears about the path of borrowing costs.
-
Why Wells Fargo's Revenue Miss Isn't Worrying Wall StreetWells Fargo is one of the best S&P 500 stocks Wednesday even after the big bank's top-line miss. Here's what you need to know.
-
Stock Market Today: Stocks Are Mixed Ahead of CPICool wholesale inflation numbers provide only slight relief before Wednesday's release of December Consumer Price Index data.
-
Stock Market Today: Dow Slides 697 Points on Super-Hot Jobs DataWhen the December nonfarm payrolls report hit the tape, there was no question which way stocks would go at Friday's opening bell.
-
Delta Stock Remains a Strong Buy After EarningsDelta stock is soaring Friday after the air carrier beat earnings expectations and issued a strong outlook. Here's what investors need to know.
-
Fed Sees Fewer Rate Cuts in 2025: What the Experts Are Saying
Federal Reserve The Federal Reserve cut interest rates as expected, but the future path of borrowing costs became more opaque.
