Weaker US Economic News Fuels Stock Rally, Reduces Fed Rate Hike Concerns

The US stock market has seen significant gains today, with the S&P 500 Index up by +0.90%, the Dow Jones Industrial Average up by +0.54%, and the Nasdaq 100 Index up by +1.23%. The rally is attributed to weaker-than-expected US economic news, which has reduced concerns about a potential Fed rate hike this month.

The December E-mini S&P futures are up by +0.85%, and the December E-mini Nasdaq futures are up by +1.16%. This follows the release of US payrolls data for September, which showed a slower-than-expected increase in nonfarm payrolls (+29,000) and average hourly earnings (+0.1% m/m). The unemployment rate also rose to 4.2%, higher than expected.

The weaker-than-expected economic news has bolstered speculation that the Fed will not raise interest rates at this month's FOMC meeting. Market analysts now predict a 20% chance of a +25 bp Fed rate hike, down from 26% before the payroll report. Lower crude oil prices are also supporting market sentiment, with WTI crude down by more than -3%. This has pushed inflation expectations and bond yields lower.