US stocks rose on Friday, with the Nasdaq Composite moving towards a record high as weaker-than-expected jobs data reduced expectations of an interest rate hike by the Federal Reserve later this month. Lower Treasury yields and falling oil prices also supported investor sentiment.
The gains were led by semiconductor stocks and large technology companies. Investors reacted positively to signs that the US labour market may be losing some strength, reducing concerns that a strong economy could keep inflation high.
Nasdaq leads gains
At 11.37am EST, the Dow Jones Industrial Average was up 179.66 points, or 0.35%, at 51,106.22. The S&P 500 gained 53.55 points, or 0.70%, to 7,720.00. The Nasdaq Composite rose 312.35 points, or 1.16%, to 27,183.95.
Earlier in the session, the gains were stronger. At 10.14am EST, the Dow was up 306.78 points, or 0.60%, at 51,233.34. The S&P 500 had gained 78.31 points, or 1.02%, to 7,744.76, while the Nasdaq was up 447.84 points, or 1.66%, at 27,319.43.
The S&P 500 was trading within 0.8% of its record high set in August, according to the Associated Press. The Nasdaq was also on course to set a record high.
Jobs growth falls short of expectations
The main focus for investors was the latest US employment report. Employers added 29,000 jobs last month, according to the Labor Department. Job growth for the previous two months was also revised sharply lower. August hiring stood at 133,000, according to AP.
The weaker jobs numbers eased concerns that the US economy could be growing strongly enough to add to inflation pressures. Earlier this week, government data showed that US economic growth during the spring was stronger than previously estimated. Growth was supported by business investment in artificial intelligence data centres and consumer spending.
The latest jobs report gave investors more reason to expect the Federal Reserve to wait for additional economic data before raising interest rates again.
Rate hike expectations fall
Traders reduced their expectations of an October rate hike following the jobs report. Reuters reported that traders were assigning a 20% probability to a 25 basis point rate increase, compared with 26% before the report.
AP reported that the probability had fallen to below 21%, from 64% a week earlier.The weaker employment figures also pushed Treasury yields lower. The two-year Treasury yield, which is closely linked to expectations for Federal Reserve policy, fell for a second consecutive day.
The 10-year Treasury yield briefly dropped below 5.17% before moving back to 5.24%. It had reached nearly 5.35% on Thursday, when longer-term Treasury yields were close to their highest levels in two decades. Lower yields can support stocks because they can reduce borrowing costs and make equities more attractive to investors.
Technology stocks lead gains
Semiconductor stocks and large technology companies were among the biggest gainers. Nvidia touched an intraday record high and was up 2.5% in Reuters’ early trading data. The Philadelphia Semiconductor Index gained 3.1%.
SpaceX rose 5.5%, while Tesla gained 4.1% and Oracle rose 3%. AP reported that Nvidia’s 1.8% gain was the single biggest force lifting the S&P 500 at the time of its report.
Tesla also benefited from its latest delivery figures. The electric vehicle maker delivered 486,532 vehicles during the latest quarter, more than analysts had expected.
Oil prices and market sentiment
Falling oil prices added to the positive mood in financial markets. Brent crude slipped below $100 a barrel after reports that the European Union had discussed additional releases of diesel and crude stocks.
AP reported that Brent crude was down about 2% at $100.24. Oil prices have remained volatile because of uncertainty over when the conflict involving Iran will allow global oil markets to return to normal. The Cboe Volatility Index, widely viewed as Wall Street’s fear gauge, fell to 15.67, its lowest level in a week.
Bitcoin and global markets
Bitcoin rose 3.4%, while Coinbase and Strategy gained about 3.1% each. Ten of the 11 major S&P 500 sectors were trading higher, led by consumer discretionary and technology. Healthcare was the only major sector trading lower.
On the New York Stock Exchange, advancing stocks outnumbered declining stocks by 3.27 to 1. On the Nasdaq, the ratio was 2.5 to 1. The S&P 500 recorded nine new 52-week highs and 14 new lows, while the Nasdaq recorded 35 new highs and 100 new lows.
European markets recovered from sharp losses in the previous session and Asian markets were mixed. Hong Kong’s Hang Seng fell 2.6%, while South Korea’s Kospi gained 0.5%.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a registered financial advisor in the respective jurisdiction.