September Jobs Report Sparks Market Rally, Oil Prices Plummet
The US nonfarm payrolls added just 29,000 jobs in September, far below the 90,000 expected, while the unemployment rate ticked up to 4.2%. The weak report prompted traders to slash bets on a Federal Reserve rate hike in October, with odds of a hold surging to 86%. The Dow Jones Industrial Average rose 0.78%, the Nasdaq Composite climbed 1.35%, and the S&P 500 added 0.92%. Chip stocks led the gains, with Nvidia hitting a fresh record high and its market cap back above $5.7 trillion. Gold, silver, and Bitcoin all advanced, with spot gold briefly trading at $4,220 per ounce and Bitcoin rising above $87,000.
The September employment data reinforced the view that the Federal Reserve will hold interest rates steady at its policy meeting this month. The clearly soft employment report suggests the US labor market is cooling faster than previously thought. The rise in the unemployment rate was driven largely by an expanding labor force, with the household survey showing employment rose by 406,000 in September.
The unexpectedly weak labor market data triggered a notable shift in market expectations for Federal Reserve policy. Traders quickly scaled back bets on an October hike, with the market-implied probability of a 25-basis-point hike in December edging up to 64% from 61% before the data. Fed officials place greater weight on the household survey's unemployment rate than on the establishment survey's nonfarm payroll count when assessing labor market conditions.