US Stocks Rally as Weak Job Growth Data Eases Rate Hike Fears

US stocks closed the week on a high note as investors welcomed a slowdown in job growth that reduced concerns about interest rate hikes. The Dow and S&P 500 rose by 0.5% and 0.7%, respectively, while the Nasdaq surged 1.2%. Led by strong gains from AI and chip stocks like Nvidia, AMD, and Broadcom, the tech-heavy index was the standout performer.

The Bureau of Labor Statistics reported that non-farm payrolls increased by just 29,000 in September, falling short of expectations. The unemployment rate ticked up to 4.2%, while average hourly earnings rose only 0.1%. A revision downwards for August's job numbers also added to the cautious tone.

Analysts pointed out that the data suggested employment was becoming less of an inflationary threat, reducing the likelihood of further Federal Reserve rate hikes this year. Axel Rudolph, chief technical analyst at IG, noted that 'the slowdown in job creation, combined with almost no increase in wages, suggests employment is becoming less of an inflationary threat and reduces the likelihood of further Fed rate hikes this year.'

The news also sparked a rally in oil prices as the G7 agreed to release 100m barrels of oil and diesel over four months to mitigate supply pressures. However, December Brent crude prices fell 1.1% to $101.23 a barrel, while WTI crude dropped 2.3% to $90.70.

Some stocks bucked the trend, however. Tesla rose despite a 2% decline in third-quarter EV sales due to a US market slowdown. The energy business saw 9.6% growth over last year. Meanwhile, Nike dropped sharply after guiding to a sharper-than-expected decline in annual revenues and announcing job cuts.