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."
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free 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
-
The Rubber Duck Rule of Retirement Tax PlanningRetirement Taxes How can you identify gaps and hidden assumptions in your tax plan for retirement? The solution may be stranger than you think.
-
No Passport? No Problem. Seven US Getaways That Feel Like an International VacationFrom Puerto Rico’s Caribbean flair to Santa Fe’s old world charm, these American destinations deliver a global travel experience — without the hassle of customs or currency exchange.
-
Stocks Swing in Volatile Session: Stock Market TodayThe main indexes fell sharply in early trading on rising China tensions, but rebounded thanks to encouraging bank earnings.
-
Stocks Retreat as Shutdown Continues: Stock Market TodayWhile the main indexes closed lower today, Delta and PepsiCo gained ground on encouraging earnings reports.
-
If You'd Put $1,000 Into Bank of America Stock 20 Years Ago, Here's What You'd Have TodayBank of America stock has been a massive buy-and-hold bust.
-
If You'd Put $1,000 Into Oracle Stock 20 Years Ago, Here's What You'd Have TodayORCL Oracle stock has been an outstanding buy-and-hold bet for decades.
-
How to Invest for Rising Data Integrity RiskAmid a broad assault on venerable institutions, President Trump has targeted agencies responsible for data critical to markets. How should investors respond?
-
The Best Bank Stocks to BuyBank stocks are part of the financial services sector and are a way to gain exposure to the broader economy. Here, we look at how you can find the best ones.
-
If You'd Put $1,000 Into Sherwin-Williams Stock 20 Years Ago, Here's What You'd Have TodaySherwin-Williams stock has clobbered the broader market by a wide margin for a long time.
-
If You'd Put $1,000 Into UnitedHealth Group Stock 20 Years Ago, Here's What You'd Have TodayUNH stock was a massive market beater for ages — until it wasn't.
