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Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 26, 2023.
Brendan Mcdermid | Reuters
Stocks rallied Friday even after the release of stronger-than-expected U.S. jobs data and a pop in Treasury yields.
The Dow Jones Industrial Average gained 320 points, or 1%. The S&P 500 added 0.5%, while the Nasdaq Composite rose 1.5%. At its session low, the Dow had fallen as much as 270 points.
The U.S. economy added 336,000 jobs in September, the Labor Department said. Economists polled by Dow Jones expected 170,000 jobs. To be sure, wages rose less than expected last month.
Traders were unclear of the reason for the intraday turnaround. Some noted it could be the softer wage number in the jobs report that made investor rethink their earlier bearish stance. Others noted the pullback in yields from the day’s highs. Part of the rally may just be to do a market that had gotten extremely oversold with the S&P 500 at one point this week down more than 8% from its high earlier this year.
Yields initially surged after the report, with the 10-year Treasury rate trading near its highest level in 16 years. The benchmark rate later eased from those levels, but was still up around 6 basis points at 4.78%.
“We’re seeing a little bit of a give back in yields from where we were around 4.8%. [With] them pulling back a bit, I think that’s helping the stock market,” said Megan Horneman, chief investment officer at Verdence Capital Advisors. “We’ve had quite a bit of weakness in the market in recent weeks, [and] some oversold conditions.”
10-Year U.S. Treasury
“Given these divergent views, the monetary policy implications of the September employment report are likely modest,” said Dante DeAntonio, labor economist at Moody’s Analytics.
“There is likely enough good news from wage growth and the unemployment rate to keep the Fed from returning to rate hikes. While market expectations about what the FOMC will do have shifted a bit after digesting this morning’s report, there is still a strong expectation that rates will remain unchanged in November,” DeAntonio added.
Technology shares led the S&P 500’s sector gains on Friday, gaining 1.3%. Palo Alto Networks, Monolithic Power Systems, Advanced Micro Devices and Arista Networks all jumped more than 3%.
Meanwhile, the consumer staples sector, which is sensitive to higher rates, fell 0.4% and 1%, respectively. Mondelez and Walmart were last down more than 3%.
The S&P 500 is up 0.3% week to date. This would break the broad market index’s four-week negative streak. The Nasdaq is up 1.2% lower for the week, while the Dow remains down 0.2%.
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