Nasdaq reached a record high as U.S. stocks experienced gains following the release of weaker-than-expected jobs data, which lessened expectations for an imminent rate hike by the Federal Reserve. This positive market sentiment was further bolstered by a decline in oil prices, contributing to a risk-on atmosphere among investors. Notable performers included semiconductor stocks and major companies, with Nvidia (NVDA.O) achieving an intraday record high with a 1.9% increase. Additionally, the Philadelphia chip index (.SOX) rose by 3%. Other significant gainers included Musk-led SpaceX (SPCX.O), which increased by 6.2%, Tesla (TSLA.O) with a 5.5% boost, and Oracle (ORCL.N), which saw a 2.4% rise.
Overall, the combination of economic data and sector performance propelled the Nasdaq Composite to new heights. Nonfarm payrolls rose by 29,000 jobs last month, according to the Labor Department employment report, significantly below the anticipated increase of 90,000 jobs projected by economists surveyed by Reuters. Additionally, the job figures for the previous two months were substantially revised downward.
Nasdaq Todd Schoenberger, chief investment officer at CrossCheck Management, remarked that despite the disappointing jobs report, which included these downward revisions, it could be viewed positively for the stock market. He indicated that with the bond market recently taking on a role similar to that of the Federal Reserve, this report effectively aligned with market conditions, suggesting the need to adjust headline metrics for broader economic health.
Monthly Change in US Jobs
Employers added 29,000 positions in September
A recent set of economic data indicates ongoing economic resilience and a slower-than-anticipated rise in prices. This, combined with statements from at least two high-ranking policymakers opposing further rate hikes, has led investors to increasingly believe that the central bank will maintain its current rates during this month meeting. Gary Schlossberg, a global strategist at Wells Fargo Investment Institute, noted that the latest jobs data significantly reduces the likelihood of an interest rate increase in October while emphasizing that the focus remains on the upcoming December meeting.
Following this analysis, traders currently estimate a 20% chance of the Federal Reserve increasing rates by 25 basis points in October, down from a previous estimate of 26% before the job report was released. Brent crude prices fell below $100 a barrel, influenced by discussions within the European Union regarding additional releases of diesel and crude stocks. This occurred amid the absence of new developments in the ongoing Middle East conflict, contributing to a sense of positive sentiment in the market.
Concurrently, the Cboe Volatility Index (VIX), which serves as a measure of market fear, decreased to a one-week low, registering at 15.67 points. In the stock market, as of 11:37 a.m. ET, the Dow Jones Industrial Average (DJI) increased by 182.27 points, equivalent to a 0.36% rise, reaching a total of 51,108.83. The S&P 500 (SPX) followed suit with a gain of 52.69 points, amounting to a 0.69% increase, settling at 7,719.22.
Investors Reassess Interest Rate Expectations
The Nasdaq Composite (IXIC) exhibited significant growth as well, adding 309.80 points, which translates to a 1.15% rise, bringing its total to 27,181.39. Six of the eleven major sectors within the S&P 500 experienced an uptick, with materials and the technology index leading these gains. Conversely, the healthcare and energy sectors lagged behind. Overall, the S&P 500 appears to be headed for a modest weekly decline amid turbulent trading sessions this week. This volatility was spurred by a selloff in Treasury bonds linked to inflation and fiscal concerns, significantly pushing the 10-year yield to its highest level in decades.
In corporate news, Nike saw a notable decrease in stock prices, falling 5.6% on Friday after the company projected an unexpected and substantial decline in annual revenue, primarily due to weakening demand in China. Additionally, Nike announced job cuts and a restructuring of its global business divisions to adapt to these challenges. Other notable declines were observed in the shares of Western Digital and Seagate Technology, both dropping approximately 14%. This decline followed reports from Nikkei indicating that Toshiba, a Japanese technology group, plans to significantly ramp up its production capacity for hard disk drives intended for use in AI data centers by fiscal 2027.
Advancing issues significantly prevailed over declining ones in the stock market, with a ratio of 2.14-to-1 on the New York Stock Exchange (NYSE) and 1.7-to-1 on the Nasdaq. The S&P 500 index experienced nine new highs in 52-week performance and 16 new lows, whereas the Nasdaq Composite saw a more substantial fluctuation, recording 41 new highs and 143 new lows.
Summary
- Indexes up: Dow 0.60%, S&P 1.02%, Nasdaq 1.66%
- Nike drops after warning on China demand weakness
- Moderna rises after Nasdaq-100 index inclusion news
- Data storage providers slump after report Toshiba to double hard disk production capacity
- Wall Street fear gauge VIX drops to one week low