Stock Indexes Rise as Fed Rate Hike Expectations Cool Following Weak Jobs Report

U.S. stock markets closed higher on Friday after weaker-than-expected employment data reduced expectations for Federal Reserve interest rate increases, with the Nasdaq gaining 1.19% and the S&P 500 rising 0.74%. Nonfarm payrolls increased by only 29,000 jobs in September, significantly below the 90,000 forecast, while the unemployment rate ticked up to 4.2%, prompting declines in Treasury yields and oil prices. Technology and large-cap stocks led gains, with Tesla surging over 5% on strong electric vehicle delivery figures, while the dollar weakened alongside rate hike speculation.

Friday's employment figures revealed a significant slowdown in U.S. job creation, with September nonfarm payrolls reaching just 29,000 additions—less than a third of economist predictions. This marked a sharp deceleration from August's revised figures and contributed to an uptick in the unemployment rate. The wage growth data also softened, posting its slowest annual increase in over three years, suggesting cooling labor market momentum across the economy.

These softer employment metrics prompted investors to reassess Federal Reserve policy expectations. Prior to the jobs report, central bank officials had already signaled caution about near-term rate decisions, and the disappointing data reinforced that sentiment. The market's positive response reflected investor relief that aggressive monetary tightening may pause, allowing equity valuations—particularly in technology and growth sectors—to stabilize and advance.