September Jobs Report Shows Sharp Slowdown, Weighs on Rate Hike Bets

The U.S. Labor Department released its September nonfarm payroll report on the 2nd, showing a sharp slowdown in hiring that fell far short of market expectations.

The data revealed that just 29,000 jobs were added to nonfarm payrolls from the prior month, significantly below the predicted gain of 90,000. The unemployment rate worsened to 4.2%, the highest level since June, and July and August payroll figures were revised down by a combined 60,000.

The sharp slowdown in hiring triggered a rapid pullback in expectations for an additional rate hike in October, with odds of a hike falling from around 29% to 17%. The 10-year Treasury yield dropped from 5.22% to 5.15%, and the dollar-yen pair declined from 157.71 to 156.95.

The results led to a surge in major equity indexes, with the Dow Jones Industrial Average rising more than 380 points at one point and the Nasdaq Composite gaining over 350 points. The Philadelphia Semiconductor Index climbed 2.6%, driven by buying concentrated in tech and semiconductor names, such as Taiwan Semiconductor Manufacturing's American Depositary Receipts.