Stocks gain, dollar falls after US jobs data; bond yields higher
Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., September 29, 2026. REUTERS/Jeenah Moon
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NEW YORK/LONDON, Oct 2 : Major stock indexes rose and the dollar fell on Friday as expectations for an interest rate hike from the Federal Reserve later this month fell after softer-than-forecast US jobs data, while US bond yields were higher after reversing early declines.
Nonfarm payrolls increased by 29,000 jobs last month after a downwardly revised 133,000 rise in August, the Labor Department’s closely watched employment report showed on Friday. Economists polled by Reuters had forecast payrolls advancing 90,000.
Bets on a second rate rise from the Fed this month faded after the data. Traders now see a roughly 21 per cent chance that the Fed will hike rates by 25 basis points in October, compared with about 26 per cent before the report. Expectations for a December hike also fell following the data, according to LSEG.
“It wasn’t as hot a labor market print as August was,” said Joseph Purtell, senior vice president, portfolio manager and rates trader at Neuberger.
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Still, he said, “we broadly categorize this labor market as stable,” and the report does not change that view.
Expectations for an October rate hike had already been declining going into Friday’s jobs report. Two top policymakers said this week they wanted more data before deciding what to do next with interest rates.
The Nasdaq hit a record high early and was last up more than 1 per cent. Lower oil prices added to bullish sentiment in stocks.
The Dow Jones Industrial Average rose 168.55 points, or 0.34 per cent, to 51,097.30, the S&P 500 rose 52.03 points, or 0.68 per cent, to 7,718.26 and the Nasdaq Composite rose 306.18 points, or 1.14 per cent, to 27,177.77.
MSCI’s gauge of stocks across the globe rose 5.58 points, or 0.49 per cent, to 1,138.84. The pan-European STOXX 600 index rose 0.69 per cent.
The dollar was down against the euro and yen. The euro was up 0.12 per cent at $1.1255. Against the Japanese yen, the dollar weakened 0.2 per cent to 157.76.
BOND YIELDS INITIALLY FALL AFTER DATA
US Treasury yields initially lost ground following the jobs data but were last higher on the day, with some investors noting the Fed could still likely raise rates again in the next six to nine months. The Fed raised rates in September for the first time since 2023.
Ten-year US yields registered their largest quarterly rise since 1994. Global bond markets have been under a sustained selloff in recent weeks as the US-Israeli war with Iran pushed up energy prices again, complicating the inflation outlook and further straining already stretched public finances.
The yield on benchmark US 10-year notes was last up 2.18 basis points at 5.256 per cent, while the 2-year note yield, which typically moves in step with interest rate expectations for the Fed, was up 3.35 bps at 4.821 per cent.
Trading on Friday remained volatile in European government bond markets, with the gap between the German and French 10-year yields hitting the widest level since the euro zone debt crisis in 2011.
German 2-year bond yields were last flat at 3.05 per cent, having swung between session lows of 2.943 per cent and highs of 3.063 per cent, while French 2-year yields were around 4 bps higher at 3.73 per cent, having risen to as much as 3.84 per cent earlier. Italian 2-year yields were down 7 bps at 3.547 per cent.
This week, 2-year German yields have fallen nearly a quarter point, while those on 2-year French bonds have risen nearly 14 bps.
OIL FALLS
Oil prices fell after reports of talks in Europe on additional diesel and crude stock releases, easing concerns over tight global energy supplies.
US crude fell 2.15 per cent to $90.83 a barrel and Brent fell to $101.37 per barrel, down 0.92 per cent on the day.
Spot gold fell 1.08 per cent to $4,132.65 an ounce.
Source: Reuters
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