Synopsis

U.S. stocks finished higher following a weaker-than-expected jobs report which eased rate hike expectations. Nonfarm payrolls rose by only 29,000, significantly below economists' forecasts of 90,000. The S&P 500 real estate index and small-cap Russell 2000 gained approximately 1% due to reassessed Fed rate increase likelihood. Despite this, the Dow and S&P 500 recorded declines for four out of five weeks.

U.S. stocks finished higher on Friday after a weaker-than-expected jobs report reduced expectations that the Federal Reserve will raise interest rates at its meeting later this month.

The S&P 500 rose 0.76% to 7,724.38. The Nasdaq Composite gained 1.19% to 27,191.33, while the Dow Jones Industrial Average added 0.51% to 51,186.71.

Nonfarm payrolls rose by 29,000 last month, the Labor Department reported, well below economists’ forecast of 90,000. Employment figures for the previous two months were also revised sharply lower.

Following the report, traders priced in a 22.7% chance of a rate increase of at least a quarter-point at the Fed’s late-October meeting, down from 24.4% on Thursday and 64.2% a week earlier, according to CME FedWatch.

“Cautious optimism is kind of where people are,” said Robert Bernstone, head of trading at SummitTX Capital. The data eased near-term rate concerns, he said, though investors remain wary about the economy and inflation.

Rate-sensitive shares advanced as investors reassessed the likelihood of another Fed increase. The S&P 500 real estate index rose about 1%, while the small-cap Russell 2000 also gained roughly 1%, its strongest daily performance in a month.

Nvidia and Tesla were among the biggest contributors to the S&P 500’s advance. Tesla’s rise helped lift the consumer discretionary sector by about 1%, making it the best-performing of the 11 major S&P sectors.

Recent economic data pointing to resilient activity and slower price increases, along with cautionary comments from two senior policymakers, had already led investors to scale back rate-hike bets this week.

Despite Friday’s gains, the Dow and S&P 500 each recorded a fourth weekly decline in the past five weeks. The Nasdaq, however, ended higher for the week—its fifth weekly gain in six.

Nike shares fell after the sportswear maker forecast a sharp annual revenue decline, citing weakness in China. The company also announced job cuts and plans to reorganize its global business divisions.

Data-storage stocks also dropped. Western Digital and Seagate Technology were among the weakest performers in the S&P 500 technology index after Nikkei reported that Toshiba plans to double production capacity for hard drives used in AI data centers by fiscal 2027.

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