Weaker Jobs Data Fuels US Stock Rally
US stocks closed higher on Friday after weaker-than-expected jobs data eased concerns about a Federal Reserve rate hike this month. The Labor Department reported that nonfarm payrolls increased by only 29,000 jobs in the previous month, far below economists' estimates of 90,000. This data significantly lowered expectations for a rate hike at the Fed's October meeting, dropping to 22.7% according to CME FedWatch, down from 24.4% the prior session and 64.2% a week earlier.
Robert Bernstone, head of trading at SummitTX Capital, noted that while the economy isn't booming, the data relieved immediate rate hike fears. However, he cautioned that concerns over economic health and inflation persist, leading to a climate of cautious optimism. Bernstone also suggested a potential market rally in the coming months due to its current unpopularity.
The Dow Jones Industrial Average rose 250.40 points, or 0.49%, to 51,176.96, while the S&P 500 gained 56.27 points, or 0.73%, to 7,722.72. The Nasdaq Composite added 319.27 points, or 1.19%, to 27,190.86. Small-cap stocks and rate-sensitive sectors like real estate saw gains, with the Russell 2000 index up 0.9%. Mega-cap stocks such as Nvidia and Tesla also contributed to the rally, with Tesla gaining 4.7%.
Despite Friday's gains, the S&P 500 and Dow recorded a fourth weekly decline in the past five weeks. The Nasdaq, however, secured a weekly gain, its fifth in the last six. Nike underperformed, dropping 3.6% after forecasting a steep decline in annual revenue due to weakness in China. Data storage providers Western Digital and Seagate Technology also fell about 10%, the worst performers in the S&P 500 tech index.