American employers added only 29,000 jobs in September. Economists had expected about 90,000. Investors took the miss as good news, which says a lot about the mood in markets right now.
The reason is the Federal Reserve. With inflation worries and high oil prices in the background, traders had been bracing for further interest-rate increases. A cooler labour market makes that less likely.
What the numbers showed
According to Edward Jones and T. Rowe Price market summaries, the unemployment rate edged up to 4.2% from 4.1%. Labour force participation was little changed at 61.8%.
The picture for earlier months was also weaker. Payroll gains for the previous two months were revised down by a combined 60,000, according to Edward Jones.
Edward Jones described a labour market that is cooling but still fundamentally healthy. It also said the data showed no sign of producing significant inflationary pressure.
How markets reacted
Stock futures rose and Treasury yields fell after Friday’s release, T. Rowe Price reported. Tools that track market pricing, such as the CME FedWatch Tool, showed lower odds of a rate increase at the Fed’s October meeting.
The calm did not fully last in bonds. Edward Jones said the early fall in yields reversed later in the session. The 10-year Treasury yield ended near its highest level since 2002.
Wall Street’s week was mixed overall. T. Rowe Price said the Nasdaq Composite and the S&P MidCap 400 advanced for the week, while the Dow Jones Industrial Average and the S&P 500 declined. Edward Jones said all S&P 500 sectors except healthcare rose on Friday, with mid-caps and tech outperforming. The Nasdaq closed near a record high.
The move carried into Asia. Bloomberg reported that MSCI’s Asia Pacific equities index gained 0.5% in early Monday trading. Japan’s Nikkei 225 rose about 2% on technology shares. Markets in South Korea and mainland China were closed for holidays. Nasdaq 100 futures were up 0.4%, Bloomberg said, after the index closed at a record on Friday.
Oil and the wider backdrop
Energy prices are part of the same story. Edward Jones said oil fell about 1.5% after the G7 nations announced they would release as much as 100 million barrels of emergency oil and diesel stocks. The aim is to avert a US export ban and curb the recent surge in fuel prices. Bloomberg said oil erased early gains on Monday.
T. Rowe Price pointed to volatile oil prices and uncertainty over the US-Iran conflict as continuing pressures on investors.
Europe had a rougher week. The STOXX Europe 600 fell 1.14%, according to T. Rowe Price. Germany’s DAX lost 0.70%, France’s CAC 40 fell 2.24% and Italy’s FTSE MIB dropped 2.67%. The firm attributed this to elevated oil prices, rising sovereign bond yields and stronger-than-expected inflation data. That data raised concern that monetary policy could stay restrictive.
Corporate news was thin in the sources. Edward Jones noted that Nike shares fell more than 3% after the company gave weaker-than-expected revenue and earnings guidance.
Why it matters beyond Wall Street
Interest rates shape what ordinary people pay. Mortgage rates, car loans, credit card balances and business loans all track the path of central bank policy and long-term bond yields. When the 10-year Treasury yield sits near its highest level in more than two decades, borrowing stays expensive even if the Fed holds off.
The jobs data also cuts both ways. Slower hiring reduces the risk of a wage-driven inflation spiral. But 29,000 new jobs is a small number, and a rising unemployment rate is a reminder that a cooling economy can mean fewer openings for people looking for work.
Fuel costs matter just as much. A surge in petrol and diesel prices feeds into transport, food and heating bills. The G7 stock release is a short-term measure. The sources do not say how long it would hold prices down.
The next test is the Fed’s October meeting. Markets now lean toward no hike, but that is a pricing of probabilities, not a decision. Inflation figures, oil and the Iran situation could all change the picture before then.