Weaker Jobs Data Boosts US Stocks as Rate Hike Expectations Fade

US stock indexes rose on Friday after weaker-than-expected jobs data reduced expectations for an October Federal Reserve interest rate hike.

The Nasdaq composite led the way, closing 1.2% higher at 27,190.86. The Dow Jones Industrial Average and S&P 500 also gained, rising 0.5% to 51,176.96 and 0.7% to 7,722.72 respectively.

However, bond markets resumed selling, with yields on benchmark US 10-year notes and 2-year notes increasing by 4.93 basis points and 4.6 basis points to 5.283% and 4.833%. European government bond markets remained volatile, with the gap between German and French 10-year yields widening.

Analysts say higher rates can be negative for stocks as they increase borrowing costs for businesses and consumers. Joseph Purtell, senior vice president at Neuberger, described the labor market as 'largely stable', but noted that it wasn't as strong as expected.