Jobs
Wall Street rises after a blowout jobs report
New York – U.S. stocks are rising amid a rush of optimism Friday after a report showed U.S. employers went on a stronger spree of hiring last month.
The S&P 500 was 0.7% higher in early trading and pulling toward its all-time high set on Monday. The Dow Jones Industrial Average was up 266 points, or 0.6%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 1.2% higher.
Stocks are clawing back losses from earlier in the week, caused by worries that worsening tensions in the Middle East could lead to disruptions in the global flow of oil. Crude prices ticked higher again on Friday, but the moves were much more modest than earlier in the week, as the world continues its wait to see how Israel will respond to Iran’s missile attack from Tuesday.
In the meantime, the strength of the U.S. economy reclaimed its spot as the top mover of markets.
Treasury yields jumped in the bond market after the U.S. government said employers added 254,000 more jobs to their payrolls last month than they cut. That was an acceleration from August’s hiring pace of 159,000 and blew past economists’ forecasts.
It was a “grand slam” of a report, according to Lindsay Rosner, head of multi-sector investing within Goldman Sachs Asset Management. She said policy makers at the Federal Reserve, who have been trying to pull off the difficult feat of keeping the economy humming while getting inflation under control, “must be smiling.”
Friday’s report capped a week of mostly encouraging data on the job market, including updates showing layoffs remain relatively low and employers are still looking for workers. Such data helps allay one of Wall Street’s top questions: whether the job market will continue to hold up after the Federal Reserve earlier kept interest rates at a two-decade high.
Before Friday’s jobs report, data had been showing hiring by U.S. employers was generally slowing. That’s not surprising given that the Fed had been trying to press the brake hard enough on the economy to stamp out high inflation.
The blowout numbers bolster hopes that the U.S. economy will indeed continue to grow, particularly now that the Federal Reserve is cutting interest rates to give it more juice. The Fed last month lowered its main interest rate for the first time in more than four years and indicated more cuts will arrive through next year.
The jobs data was strong enough to push traders to downgrade their forecasts for how steeply the Federal Reserve will cut interest rates by at its next meeting in November. They’re now forecasting just a 9% probability that the Fed will deliver another larger-than-usual cut of half a percentage point, according to data from CME Group. That’s down from the coin flip’s chance they saw a week ago.
That in turn sent the yield on the two-year Treasury shooting up to 3.86% from 3.71% late Thursday. The 10-year yield, which takes future growth for the economy and inflation into more consideration than the two-year yield, rose to 3.95% from 3.85%.
Also Friday, some 45,000 dockworkers at East and Gulf coast ports are returning to work after their union reached a deal to suspend its three-day strike until Jan. 15 to provide time to negotiate a new contract.
In the oil market, the price for a barrel of Brent crude, the international standard, rose 0.8% to $78.24 per barrel and is up a little more than 9% for the week. A barrel of benchmark U.S. crude rose 0.5% to $74.09, up from roughly $68 at the start of the week.
In stock markets abroad, indexes rose across much of Europe following the strong jobs report from the world’s largest economy. In Asia, Hong Kong’s Hang Seng jumped 2.8% in its latest sharp swerve. It soared a bit more than 10% this week on excitement about a flurry of recent announcements from Beijing to prop up the world’s second-largest economy.
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AP Business Writers Yuri Kageyama and Matt Ott contributed.
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