Stocks surged on Friday after a cooler-than-expected September jobs report eased pressure on the Federal Open Market Committee (FOMC) to raise interest rates at its meeting later this month. Oil prices retreated amid a global effort to support crude supply. But bond yields pushed up again following an initial pullback on the employment news, and the main equity indexes slipped from intraday highs.
The 2-year Treasury yield fell from 4.787% on Thursday to 4.693% right after the release of the nonfarm payrolls report, but it was already rising before the opening bell and ended the session up 5.0 basis points at 4.837%.
The Bureau of Labor Statistics (BLS) said the U.S. added 29,000 new jobs last month, well below a consensus forecast of 93,000, and the unemployment rate unexpectedly ticked up to 4.2% from 4.1%.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more – straight to your e-mail.
Profit and prosper with the best of expert advice – straight to your e-mail.
The 10-year Treasury yield (+4.5 bps, 5.279%) and the 30-year Treasury yield (+2.5 bps, 5.628%) followed similar trajectories.
“Payrolls growth disappointed in September,” Fifth Third Commercial Bank Chief Economist Bill Adams writes. “With downward revisions to July and August, the acceleration of job growth that seemed visible in the August jobs report has been revised away.”
Still, the economist observes, the mediocre September jobs report isn’t bad enough to shift the Fed’s focus from inflation.
“Their next decision in late October is live,” according to Adams, “and will probably be swayed by the September CPI and PPI reports, geopolitical developments, and prices at the pump between now and then.”
Looking for more timely stock market news to help gauge the health of your portfolio? Sign up for Closing Bell, our free newsletter that’s delivered straight to your inbox at the close of each trading day.
According to CME FedWatch, price action in the federal funds futures market indicates a 22.7% probability the Fed hikes rate by 25 basis points at the October Fed meeting, down from 64.2% a week ago.
Meanwhile, the front-month West Texas Intermediate crude oil futures contract was down 1.5% at $91.45 per barrel.
In an effort to mitigate disruptions to the global supply chain, the G7 and the International Energy Agency will coordinate the release of up to 100 million barrels of emergency crude oil and diesel fuel over the next four months.
HPE gets an AI bounce
By the closing bell, the tech-heavy Nasdaq Composite was holding a 1.2% gain at 27,190, the broad-based S&P 500 had risen 0.7% to 7,722, and the blue-chip Dow Jones Industrial Average was higher by 0.5% at 51,176.
Artificial intelligence (AI) revolutionary Nvidia (NVDA) hit a new all-time high, and its market cap climbed closer to $6 trillion, following the $150 billion stock buyback increase management announced on Monday.
It’s the biggest stock buyback ever, and Nvidia plans to buy a total of $235 billion of its own shares through fiscal 2028.
Electric vehicle maker Tesla (TSLA) was up 4.5% on management’s report that third-quarter deliveries topped Wall Street’s forecast, though rival Rivian (RIVN) was down 3.1% because it didn’t beat its delivery forecast by enough to satisfy analysts.
Old-school Silicon Valley legacy outfit Hewlett-Packard Enterprise (HPE, +7.4%) was one of the best-performing S&P 500 stocks and also closed at an all-time high on Friday.
Management of the tech stock forecast solid revenue growth for its networking segment because of demand for AI infrastructure. The segment includes “data-center networking, routing, and campus & branch” and serves enterprise and service provider customers such as hyperscalers, as well as “neocloud” platforms that support AI computers.
Has Nike lost its swoosh?
Nike (NKE) was the worst-performing Dow Jones stock on Friday following management’s report on fiscal 2027 first-quarter results after the closing bell on Thursday.
Revenue was slightly below Wall Street’s forecast, and earnings were in line with the consensus estimate. But management’s forecast for full-year earnings of $1.15 to $1.35 per share fell well shy of the $1.67 analysts wanted to see.
And guidance for a high-single-digit decline in percentage terms for revenue was a lot bigger than Wall Street expected. As UBS analyst Jay Sole writes in a post-report note, “The pivotal Nike question remains ‘Is all the ‘bad news’ now priced in?'”
Sole cites NKE’s steep pullback, but the analyst says he still doesn’t see a good entry point. One potential upside catalyst is Nike’s analyst day in November and whether management can convince Wall Street its downward earnings revision cycle has ended.
“The main downside risk,” he adds, “is the rebound takes much longer than the market anticipates and therefore the downward earnings revision cycle may not be over.”
Sole reiterated his Neutral (Hold) rating, but he cut his 12-month target price for the iconic consumer discretionary stock to $34 from $42.