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U.S. stocks finished higher Friday after September payroll growth came in below forecasts and unemployment rose to 4.2%. Futures-market pricing put the probability of an October quarter-point Fed rate hike at 22.7%, down from 64.2% a week earlier, even as Treasury yields rose during the session.
U.S. stocks rose Friday after a weaker-than-expected September jobs report eased market expectations for a Federal Reserve rate hike later this month. The Nasdaq Composite gained 319 points, or 1.2%, to 27,190, while the S&P 500 added 0.7% and the Dow rose 0.5%. Markets gave back some intraday gains as Treasury yields climbed from their post-report lows.
The Bureau of Labor Statistics reported that the U.S. added 29,000 jobs in September, well below the 93,000 consensus forecast cited in the report. The unemployment rate rose to 4.2% from 4.1%. The jobs figures initially pushed the two-year Treasury yield down from 4.787% on Thursday to 4.693%, but the yield reversed course and ended Friday at 4.837%, up 5 basis points for the day.
Other benchmark yields also finished higher: the 10-year Treasury yield rose 4.5 basis points to 5.279%, and the 30-year yield gained 2.5 basis points to 5.628%. According to CME FedWatch, federal funds futures implied a 22.7% probability of a 25-basis-point October rate increase, down from 64.2% a week earlier. That figure reflects market pricing, not a Fed decision or commitment.
Among major indexes, the Nasdaq closed at 27,190, the S&P 500 at 7,722 and the Dow at 51,176. Hewlett Packard Enterprise rose 7.4% after management forecast solid revenue growth in its networking segment, citing demand for AI infrastructure. Nike was the Dow’s weakest performer after its latest results and forecast disappointed analysts: the company projected fiscal 2027 first-quarter revenue would fall by a high-single-digit percentage and forecast full-year earnings below the analyst estimate cited in the report.
Jobs Data Shift October Rate Bets
The report matters because labor-market strength is one input the Federal Reserve weighs alongside inflation when setting interest rates. A sharp shortfall in hiring and a rise in unemployment can reduce concern that the economy is running so hot that further rate increases are needed. Friday’s futures pricing showed a substantial decline in the market-implied chance of an October hike, which helped support equities.
That reaction does not settle the Fed’s next move. Bond yields ended higher despite the softer employment report, and stocks retreated from session highs. The divergence underlines that investors are responding to more than one signal and that market prices can change as new inflation data and other developments arrive.
The index gains also concealed different company-level drivers. HPE’s advance was tied to management’s outlook for AI-related networking demand, while Nike fell on weaker-than-expected guidance. For readers tracking portfolios, the session showed how economic expectations and individual earnings outlooks can influence stocks at the same time.
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The Fed’s October Decision Window
The September employment report arrived ahead of the Federal Reserve’s next scheduled policy decision later in October. The source report said revisions to July and August payroll figures also weakened the recent picture of job growth. Fifth Third Commercial Bank Chief Economist Bill Adams wrote that the apparent acceleration in hiring seen in the August report had been revised away.
Adams cautioned that the September report did not by itself move the Fed’s focus away from inflation. He said the October decision would likely be affected by September consumer and producer price reports, geopolitical developments and fuel prices. The source also reported that the G7 and the International Energy Agency planned to coordinate the release of up to 100 million barrels of emergency crude oil and diesel over four months to help address supply-chain disruptions. Front-month West Texas Intermediate crude futures fell 1.5% to $91.45 a barrel on Friday.
“Payrolls growth disappointed in September.”
— Bill Adams, chief economist at Fifth Third Commercial Bank
Rate Decision Still Depends on Data
The Fed has not announced an October rate decision, and the 22.7% probability is a reading of futures-market pricing rather than a forecast guaranteed to come true. The report does not provide the subsequent September inflation readings, so their influence on policymakers and markets is not yet known.
It also remains unclear whether Friday’s rise in Treasury yields will persist or how upcoming economic and geopolitical developments will affect rate expectations. The source describes planned coordinated fuel releases, but does not specify the release schedule or how much supply will reach the market at particular times.
Inflation Reports Will Shape Fed Outlook
Investors will watch the September consumer and producer price reports for further evidence on inflation ahead of the Fed’s late-October meeting. As Adams noted, geopolitical developments and prices at the pump are also factors that could affect the policy outlook. The next key market milestones are those data releases and the Fed’s decision; neither the timing nor direction of any rate change is confirmed by Friday’s futures pricing.
Company-specific news will continue to shape individual shares as well. Nike’s analyst day in November was identified in the source report as a potential test of whether management can persuade investors that earnings revisions have stabilized. The report did not establish that the decline in its outlook has ended.
Key Questions
Why did the Nasdaq rise on Friday?
The Nasdaq gained 1.2% after September job growth came in well below the cited consensus forecast and unemployment rose. The report eased market expectations for an October Fed rate increase, although the indexes pulled back from their intraday highs.
How likely was an October Fed rate hike?
CME FedWatch pricing cited in the report implied a 22.7% chance of a 25-basis-point hike, down from 64.2% a week earlier. This is a market-implied probability, not an official decision by the Federal Reserve.
What did the September jobs report show?
The Bureau of Labor Statistics reported 29,000 jobs added in September, compared with a 93,000 consensus forecast cited in the report. Unemployment rose to 4.2% from 4.1%.
Did Treasury yields fall after the jobs report?
The two-year yield fell immediately after the report, from 4.787% on Thursday to 4.693%, but then rose and finished Friday at 4.837%. The 10-year and 30-year yields also ended the session higher.
Source: rss
