U.S. stocks surged on Friday, propelling major indices to a strong finish, as positive non-farm payroll figures alleviated concerns regarding Middle Eastern tensions and spurred investors to engage in substantial buying across various sectors.
The Dow Jones Industrial Average reached a new record high, closing at 42,352.75, an increase of 341.16 points or 0.81%. The S&P 500 advanced by 51.13 points or 0.9% to finish at 5,751.07, while the Nasdaq rose by 219.37 points or 1.22% to close at 18,137.85.
Notable gains were seen among companies such as NVIDIA Corporation, Amazon, Meta Platforms, Berkshire Hathaway, JP Morgan Chase, Exxon Mobil, Oracle Corporation, Bank of America, Netflix, Salesforce, IBM, GE Aerospace, American Express, Morgan Stanley, Walt Disney, Uber Technologies, and Starbucks Corporation, with shares climbing between 1% to 4%.
Labor Department data revealed that non-farm payroll employment increased by 254,000 roles in September, following an upwardly revised rise of 159,000 jobs in August. Economists had anticipated an employment rise of 140,000 jobs, as opposed to the initial 142,000 jobs reported for the preceding month.
Moreover, the report noted a slight decline in the unemployment rate to 4.1% in September from 4.2% in August, contrary to economists' expectations of an unchanged rate.
This robust job growth tempered fears regarding the economic outlook but diminished prospects for aggressive interest rate cuts in the coming months. Following the jobs report, the CME Group's FedWatch Tool indicates a 91.2% probability that the Federal Reserve will reduce rates by a quarter point in November, with an 8.8% likelihood of a half-point rate cut.
According to Bill Adams, Chief Economist at Comerica Bank in Dallas, the unexpected strength in job figures supports a case for a more modest rate cut at the next Fed decision scheduled for November. Gina Bolvin, President of Bolvin Wealth Management Group in Boston, also suggests the strong jobs report lowers expectations for a 0.5% rate cut in November. Bolvin notes that with oil prices climbing due to Middle Eastern tensions and wages increasing, the Fed may have inflation concerns. Jamie Cox, Managing Partner at Harris Financial Group, concurs that justifying a significant rate cut in November will be challenging given the employment data. Jeffrey Roach, Chief Economist at LPL Financial, believes the solid jobs report raises the likelihood of continued economic growth above trend in the next quarter and anticipates a quarter-point rate reduction in upcoming meetings.
Internationally, Asian markets concluded mixed on Friday as investors awaited the pivotal U.S. jobs report amid ongoing Middle Eastern tensions, anticipating implications for U.S. interest rate trajectories.
In Europe, stocks finished higher on Friday, buoyed by positive U.S. jobs data. Despite lingering geopolitical tensions, investors actively acquired several leading stocks.
Investors also processed a range of economic data from Europe, with the pan-European Stoxx 600 climbing 0.44%. Germany's DAX and France's CAC 40 increased by 0.55% and 0.85%, respectively, while the U.K.'s FTSE 100 experienced a slight decline.
