US Stocks Slide as Labor Report Triggers Rate Hike Repricing

The US stock market experienced a significant shift in expectations last week, driven by a pivotal release of nonfarm payroll data. On September 28 to October 4, 2026, the U.S. Treasury yield rose to its highest level in over two decades, reaching 5.34 percent, influenced by elevated crude oil prices and a surge in the ISM Manufacturing prices paid index to 77.9.

However, market dynamics changed on Friday following the release of the September nonfarm payrolls report, which showed the U.S. economy added just 29,000 jobs, far below expectations, while the unemployment rate rose to 4.2 percent and annual wage growth slowed to 3.0 percent.

This labor market deceleration led investors to sharply recalibrate Federal Reserve policy expectations, driving the CME FedWatch probability of an October interest rate hike down to approximately 18 to 20 percent and triggering a retreat in long-term bond yields.