US stocks close higher as softer jobs data quiets rate-hike expectations

US stocks advanced on Friday to close out the trading week after weaker-than-expected jobs data dampened expectations for a rate hike from the Federal Reserve at its policy meeting this month.

The labor department said nonfarm payrolls increased by 29,000 jobs last month, with the count for the prior two months also revised sharply lower, and well below the 90,000 estimate of economists polled by Reuters.

The weaker-than-anticipated data pulled down expectations for a rate hike of at least 25 basis points from the Fed at its meeting at the end of October to 22.7%, according to CME FedWatch, from 24.4% in the prior session and 64.2% a week earlier.

“Today’s news was OK insofar as it means the economy isn’t roaring,” said Robert Bernstone, head of trading at SummitTX Capital in New York. “But how good is that? Yes, it’s fine insofar as it takes the short-term rate hike off, but there is a concern over the economy, there is a concern over inflation, so cautious optimism is kind of where people are.”

“But with that said, a potential squeeze into the end of the year, or at least for the next month or two, could happen just because it’s a hated rally.”

The Dow Jones Industrial Average rose 250.40 points, or 0.49%, to 51,176.96, the S&P 500 gained 56.27 points, or 0.73%, to 7,722.72 and the Nasdaq Composite added 319.27 points, or 1.19%, to 27,190.86.

Small-cap stocks outperform

Tempered expectations for an impending rate hike helped boost rate-sensitive stocks such as the S&P 500 real estate index, which gained 0.4%, and the small-cap Russell 2000 index, which gained 0.9% to register its biggest daily gain in a month.

Mega-cap stocks helped lead the advance, with Nvidia up 1.3% and Tesla gaining 4.7% to put them among the biggest boosts to the S&P 500. Tesla’s gains helped lift the S&P 500 consumer discretionary index 1.4% as the best-performing of the 11 major S&P sectors.

A string of recent data showing resilient economic activity and a slower-than-expected increase in prices, along with comments from two top policymakers cautioning against another rate increase, had already led investors to scale back expectations this week for an October rate hike.

Despite Friday’s gains, both the Dow and S&P 500 recorded a fourth weekly decline in the past five, but the Nasdaq secured a weekly gain, its fifth in the last six.

For the week, the S&P 500 shed 0.27%, the Nasdaq rose 0.45%, and the Dow fell 1.26%.

Nike stumbled 3.6% as the worst performer on the Dow, after the US sportswear company forecast a surprise steep drop in annual revenue due to weakness in China, announced job cuts and decided to shake up its global business divisions.

Shares of data storage providers fell, with Western Digital and Seagate Technology both tumbling about 10% as the worst performers in the S&P 500 tech indexv. Nikkei reported that Japanese technology group Toshiba plans to double its production capacity for hard disk drives used in AI data centers within fiscal 2027.

Advancing issues outnumbered decliners by a 1.67-to-1 ratio on the NYSE, and by a 1.34-to-1 ratio on the Nasdaq.

The S&P 500 posted 11 new 52-week highs and 20 new lows, while the Nasdaq Composite recorded 57 new highs and 224 new lows.

Volume on US exchanges was 16.93 billion shares, compared with the 17.28 billion average for the full session over the last 20 trading days.

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