The S&P 500 and Nasdaq rose 1%: Markets no longer expect the Fed to raise rates in October
Photo: X / NYSE
A sharp slowdown in U.S. job growth led to a rise in stock prices. Treasury yields fell amid speculation that the Federal Reserve (Fed) will not need to raise interest rates in the near future, according to Bloomberg.
Against this backdrop, the S&P 500 jumped by just over 1%, the Nasdaq Composite rose 1.4%, and the Dow Jones gained 0.74%.
What's Happening in the Job Market
Fed officials now have additional reasons to pause before continuing to raise interest rates in the U.S., Reuters notes: government employment data showed that the labor market is cooling more than expected. Specifically, the U.S. economy added 29,000 new jobs in September—instead of the expected 84,000. This figure was also significantly lower than August’s gain of 133,000 new jobs. The unemployment rate rose to 4.2% from 4.1% a month earlier.
"The report is mixed; it's enough to keep the Fed from raising interest rates, but it's not bad enough to undermine expectations for U.S. economic growth," commented Wells Fargo strategist Eric Nelson.
Following the release of the latest macroeconomic data, traders have stopped pricing in a Fed rate hike by the end of the year, Bloomberg notes.
The latest employment data may revive the “bad news is good news” narrative, but hoping for a weakening labor market just for the sake of more accommodative financial conditions is a poor trade-off, according to Bret Kenwell of eToro. Inflation remains a problem, but a collapse in the labor market would create a problem of an entirely different kind, he added.
This article is being updated
This article was AI-translated and verified by a human editor
