Nasdaq, S&P, Dow mixed after September jobs report blasts through expectations

Wall Street’s major averages were mixed Friday, and Treasury yields jumped, after nonfarm payrolls surged in September, soothing growth fears but slashing odds of a big Fed rate cut next month.

The Labor Department said September U.S. nonfarm payrolls were +254K, stronger than 132.5K expected and higher than August job additions of +159K. August’s figure was upwardly revised from +142K.

The Nasdaq Composite (COMP:IND) +0.3%, and the S&P 500 (SP500) was about even, paring earlier gains. The Dow (DJI) slipped less than -0.1%. J.P. Morgan (JPM) and American Express (AXP) paced blue-chip advancers, while Home Depot (HD) fell. Six of 11 S&P 500 sectors rose, with Energy at the top, +0.7%.

U.S. Treasury yields popped to monthly highs on the prospect that the Fed will opt for a standard rate cut of 25 basis points in November. The 10-year Treasury yield (US10Y) climbed 11 basis points to 3.96%. The 2-year yield (US2Y) was up 19 basis points to 3.91%.

“No doubt about it, the jobs report is strong and lowers expectations for a .50 basis point cut in November,” Gina Bolvin, president of Bolvin Wealth Management Group, said in a note. Odds of a half-point rate cut in November tumbled to 5.5% from 32% on Thursday after the stronger-than-expected payrolls report.

“With oil prices rising because of Middle East tensions ratcheting up, and average hourly earnings rising, the Fed may worry about inflation rearing its ugly head. We may be back to them focusing on a 50/50 dual mandate,” Bolvin said. “This doesn’t change my positive outlook for stocks for the end of the year and into 2025.”

Brent crude (CO1:COM) and WTI oil (CL1:COM) have jumped ~9% over the past five days, ignited after Iran’s retaliatory missile attack against Israel on Tuesday. U.S. President Joe Biden on Thursday said there’s discussion about the option of Israel striking Iran’s oil facilities.

“Looking at the broad picture of the labor market, the position is what it has been all year. Firms are slower to hire, but not keen to fire. This gives job security, and supports consumer spending patterns,” UBS’ Paul Donovan said.

Wall Street’s major stock averages fell Thursday while oil prices spiked up. The averages were each in position to end lower for the week.