Stocks climbed after a soft jobs report lifted rate-cut hopes: Friday recap

U.S. stocks rallied Friday after a soft September jobs report hardened the case for lower interest rates. The S&P 500 rose 56.27 points, or 0.73%, to close at 7,722.72. The Nasdaq Composite led the major gauges, up 319.27 points, or 1.19%, to 27,190.86. The Dow Jones Industrial Average added 250.40 points, or 0.49%, to 51,176.96. Gains were broad. The advance firmed through the session as traders read the morning’s hiring data as a reason for the Federal Reserve to hold steady or ease.

The buying reached almost every corner of the sector board. Consumer discretionary led with a 1.13% gain, and technology followed closely at 1.01%. Industrials added 0.78%, and materials rose 0.66%. Economically sensitive groups did the heaviest lifting. Ten of the eleven sectors finished higher. Only health care slipped, and barely, off 0.01%. Financials and energy sat at the back of the pack among the day’s gainers, up 0.06% and 0.19%. The gap between the best and worst groups ran to just 1.14 percentage points, a sign of broad-based buying across the market.

The catalyst arrived before the opening bell. The Labor Department reported that U.S. employers added 29,000 jobs in September, well short of the roughly 90,000 economists had expected, and the unemployment rate ticked up to 4.2% from 4.1%. The hiring total marked a sharp slowdown from the 133,000 jobs added the prior month, and the labor force participation rate edged up to 61.8%. Average hourly earnings cooled, rising 3.0% from a year earlier against a 3.2% forecast. Weak hiring and softer wage growth pushed investors to pare bets on further Fed tightening, and rate-sensitive technology shares led the response. The report also raised the odds, in interest-rate futures, that the central bank leaves policy unchanged at its October meeting.

Beneath the headline averages, smaller companies kept pace with the leaders. The Russell 2000 exchange-traded fund rose 0.90% on the day, ahead of the S&P 500 tracker’s 0.74% and a shade behind the Nasdaq-100 fund’s 1.02%. Volatility fell hard. The Cboe Volatility Index dropped to 15.31, down 6.59% on the session and a level that signals little appetite for downside protection among options traders. In the bond market, the 10-year Treasury yield stood at 5.29%, little changed even as rate-cut expectations firmed.

The week as a whole was mixed. The S&P 500 exchange-traded fund finished 0.22% lower across the past five sessions, and the Dow proxy fell 1.23%. The small-cap fund slipped 0.16%. The Nasdaq proxy was the exception, up 0.68% as technology carried much of the load. Friday’s gains trimmed the week’s losses without erasing them.

The calendar stays busy next week. The ISM services index is due Monday, and minutes from the Fed’s last policy meeting arrive Wednesday. Several Federal Reserve officials are scheduled to speak over the stretch, and third-quarter earnings season begins in earnest later in the month. After a jobs report that reset the rate debate, those releases give investors their next read on the economy.

This is a general-market summary for information only — not investment advice, and not a recommendation regarding any security.