US stocks advanced on Friday to close out the trading week as weaker-than-expected nonfarm payrolls data dampened expectations for a rate hike from the Federal Reserve, according to Reuters. The broader market gains were led by technology shares, with the Nasdaq Composite hitting an intraday record high, CNBC reported.
Lower payroll numbers reduce rate hike expectations
The U.S. Labor Department reported that nonfarm payrolls increased by 29,000 jobs last month, while counts for the prior two months were revised sharply lower, according to Reuters. The employment figure missed the 90,000 estimate of economists polled by Reuters. Following the report, expectations for a 25 basis point rate hike from the Federal Reserve at its meeting at the end of October dropped to 22.7%, down from 24.4% in the previous session and 64.2% a week earlier, according to the CME FedWatch tool cited by Reuters.
“Today’s news was OK insofar as it means the economy isn’t roaring,” Robert Bernstone, head of trading at SummitTX Capital in New York, told Reuters. “But how good is that? Yes, it’s fine insofar as it takes the short-term rate hike off, but there is a concern over the economy, there is a concern over inflation, so cautious optimism is kind of where people are.”
Major stock indexes finish the session higher
Major stock indexes finished the session higher. As reported by Reuters, the Nasdaq Composite advanced 319.27 points (1.19%) to finish at 27,190.86, the S&P 500 climbed 56.27 points (0.73%) to 7,722.72, and the Dow Jones Industrial Average added 250.40 points (0.49%) to end the day at 51,176.96. Despite the Friday advance, the Dow and S&P 500 both recorded a fourth weekly decline in the past five, while the Nasdaq secured its fifth weekly gain in the last six, closing down 1.26% for the Dow and 0.27% for the S&P 500 while adding 0.45% on the Nasdaq over the week.
Megacap equities drive session advance
Rate-sensitive sectors and megacap equities drove the session’s advance. The S&P 500 real estate index gained 0.4%, and the small-cap Russell 2000 index rose 0.9% to record its biggest daily gain in a month, according to Reuters. Nvidia shares climbed 1.3%, and Tesla jumped 4.7%, lifting the S&P 500 consumer discretionary index by 1.4% as the best-performing of the 11 major S&P sectors. Jed Ellerbroek, portfolio manager at Argent Capital Management, said that market participants ahead of earnings season are favoring technology and data center capital expenditure beneficiaries.
Nike and data storage shares face steep drops
Individual equities experienced sharp losses amid corporate announcements and industry reports. Nike shares tumbled 3.6% to rank as the worst performer on the Dow after the sportswear company forecast a surprise steep drop in annual revenue driven by weakness in China, announced job cuts, and initiated a shake-up of its global business divisions, Reuters reported. Meanwhile, data storage providers Western Digital and Seagate Technology both fell about 10% as the worst performers in the S&P 500 tech index. According to Reuters, this pullback came in the wake of a Nikkei article revealing Toshiba’s intention to double its fiscal 2027 manufacturing output for hard disk drives utilized in artificial intelligence data hubs.
Job growth misses estimates as Nike shares drop
- Nonfarm payrolls increased by 29,000 jobs, falling significantly short of the 90,000 estimate anticipated by economists polled by Reuters.
- Following a Nikkei disclosure indicating that Japanese corporate group Toshiba intends to double its production output for hard disk drives deployed in AI data centers during fiscal 2027, both data storage companies retreated roughly 10%, per Reuters coverage.
- Nike dropped 3.6% to become the worst performer on the Dow after issuing a surprise forecast for a steep decline in annual revenue due to weakness in China and announcing job cuts and global division restructuring, according to Reuters.
- According to the CME FedWatch tool cited by Reuters, expectations for a rate hike of at least 25 basis points at the end of October fell to 22.7%, down from 64.2% a week earlier.
Both the Dow and the S&P 500 previously booked four weekly declines out of five prior to Friday’s market recovery.
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