Stocks rise after weak US jobs data but bonds resume selling
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 a Federal Reserve interest rate increase later this month fell after softer-than-forecast US jobs data.
Yields, however, rose again, as the bond market resumed an ongoing selloff that has seen global yields rise to levels not seen in two decades.
Nonfarm payrolls increased by 29,000 jobs last month, the Labor Department’s closely watched employment report showed, short of the expected gain of 90,000, according to economists polled by Reuters. Job growth for August was revised down to 133,000 from a previously reported 162,000 surge.
Bets on an October rate rise from the Fed, which last month increased rates for the first time since 2023, faded after the data. Traders were last pricing in a roughly 80 per cent probability that rates would be unchanged at this month’s meeting compared with 74 per cent before the data.
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“It wasn’t as hot a labor market print as August,” said Joseph Purtell, senior vice president, portfolio manager and rates trader at Neuberger Berman. He still described the labor market as largely stable, however.
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. Odds of a December hike were last at around 86 per cent probability, according to LSEG data.
Higher rates are often viewed as a negative for stocks because they increase borrowing costs for businesses and consumers.
On Wall Street, 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 per cent, and the small-cap Russell 2000 index, which gained 0.9 per cent to register its biggest daily gain in a month.
The Nasdaq Composite was 1.2 per cent higher, leading Wall Street, as it gained 319.27 points to 27,190.86. The Dow Jones Industrial Average rose 250.40 points, or 0.5 per cent, to 51,176.96, the S&P 500 rose 56.27 points, or 0.7 per cent, to 7,722.72. For the week, the S&P 500 shed 0.27 per cent, the Nasdaq rose 0.45 per cent, and the Dow fell 1.26 per cent.
MSCI’s gauge of stocks across the globe rose 7.01 points, or 0.6 per cent, to 1,140.27. The pan-European STOXX 600 index ended 0.75 per cent higher.
The dollar was down against the euro and yen. The euro was last up 0.16 per cent at $1.1259. Against the Japanese yen, the dollar weakened 0.18 per cent to 157.79.
GAP BETWEEN GERMAN, FRENCH YIELDS HITS WIDEST SINCE 2011
US Treasury yields initially lost ground following the jobs data, but were later higher on the day, with some investors noting that the jobs report was not so weak that it removed chances for the Fed to raise rates in coming months.
Global bond markets have been steadily selling off in recent weeks as the US-Israeli war with Iran pushed up energy prices, complicating the inflation outlook and further straining already stretched public finances. Benchmark 10-year US yields closed September with their largest quarterly rise since 1994.
The yield on benchmark US 10-year notes was last up 4.72 basis points at 5.281 per cent, while the 2-year note yield, which typically moves in step with interest rate expectations for the Fed, was up 3.98 bps at 4.827 per cent. For the week, 10-year yields were on track for a 10-basis-point increase, which would mark their fifth consecutive weekly gain.
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.
Overseas, 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.
Brent crude futures climbed while US West Texas Intermediate held on to a portion of earlier losses after European leaders agreed to US President Donald Trump’s request to release diesel reserves.
Brent was up 46 cents, or 0.45 per cent, at $102.77 a barrel in late afternoon. WTI was down 1 per cent to $91.90 a barrel.
Spot gold fell 1.01 per cent to $4,135.68 an ounce.
Source: Reuters
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