Stocks and bonds rise as jobs ease Fed-hike wagers: Markets wrap

By Rita Nazareth

(Bloomberg) — A sharp slowdown in the U.S. jobs market drove stocks higher as bond yields fell on speculation the Federal Reserve won’t be forced to raise interest rates any time soon.

Those bets revived the appetite for riskier corners of the market, with the S&P 500 paring most of its weekly loss. Money markets no longer fully priced in a full Fed hike in 2026. Treasuries continued to rebound after a rout that sent yields to multi-year highs. A drop in oil prices also helped sentiment, with Brent slipping below $100, easing anxiety over inflation.

The U.S. added fewer jobs than expected in September and wage growth slowed, signalling some caution among employers amid rising costs. 

Nonfarm payrolls increased 29,000 last month after a downward revision to the prior two months, according to Bureau of Labor Statistics data out Friday. That missed all estimates in a Bloomberg survey of economists. The unemployment rate rose to 4.2%, partly reflecting a growing workforce.

“A softer-than-expected jobs report should put an October Fed hike firmly on the back foot,” said Seema Shah at Principal Asset Management. “Weaker payrolls, softer wage growth and a higher unemployment rate all point to a labour market that’s cooling rather than reaccelerating.”

“Today’s soft payroll report demonstrates that the labour market is simmering, not boiling, which should bolster the case for the Fed to remain on hold at the October meeting,” said Jeff Schulze at Franklin Templeton Institute.

If upcoming jobs reports continue to reveal weak data, the Fed could reconsider its tightening stance – particularly if there are signs that the labour market is slowing down faster than policymakers anticipated, according to Jerry Tempelman at Mutual of America Capital Management. 

“Today’s soft print argues against the idea that the labour market is re-tightening,” said Lindsay Rosner at Goldman Sachs Asset Management. “One follow-up hike in December remains our base case; however, continued pressure by markets and moves higher in energy prices could force the Fed’s hand this month as well.”

Today’s report may revive the “bad news is good news” narrative, but hoping for a weaker labour market just to secure easier financial conditions is a poor trade-off, according to Bret Kenwell at eToro. Inflation remains a problem, but a breakdown in the labour market would create an entirely different one, he noted.

“Going forward, 5% on the 10-year Treasury is the level to watch. If that becomes the new floor, it could challenge the idea that markets can continue to absorb higher rates without consequences,” Kenwell added.

Corporate Highlights:

• Tesla Inc. reported better-than-expected sales for the third quarter, a sign of stability for the company’s core business at a challenging moment for the electric-vehicle market.
• Broadcom Inc.’s Wall Street syndicate is starting to gather $60 billion of fresh AI chip financing to benefit Anthropic PBC and other companies, according to people with knowledge of the matter.
• Amazon.com Inc. is exploring a deal to shift about $8 billion worth of top-end Nvidia Corp. chips off its balance sheet, according to the Financial Times.
• Microsoft Corp.’s Azure and Amazon Web Services are set to be designated under the European Union’s strict rulebook for Big Tech.
• Nike Inc. is cutting jobs and embarking on a sweeping overhaul of the business as results deteriorate and test Wall Street’s patience with Chief Executive Officer Elliott Hill.

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.8% as of 9:31 a.m. New York time
• The Nasdaq 100 rose 1%
• The Dow Jones Industrial Average rose 0.7%
• The Stoxx Europe 600 rose 0.8%
• The MSCI World Index rose 0.7%

Currencies

• The Bloomberg Dollar Spot Index fell 0.3%
• The euro was little changed at $1.1252
• The British pound rose 0.2% to $1.3227
• The Japanese yen rose 0.4% to 157.47 per dollar

Cryptocurrencies

• Bitcoin rose 2.4% to $86,642.95
• Ether rose 2% to $2,752.5

Bonds

• The yield on 10-year Treasuries declined three basis points to 5.21%
• Germany’s 10-year yield declined eight basis points to 3.43%
• Britain’s 10-year yield declined six basis points to 5.34%
• The yield on 2-year Treasuries declined three basis points to 4.76%
• The yield on 30-year Treasuries declined two basis points to 5.59%

Commodities

• West Texas Intermediate crude fell 4% to $89.11 a barrel
• Spot gold rose 0.3% to $4,189.47 an ounce

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Last modified: October 2, 2026