Key Points
U.S. employers added just 29,000 jobs in September, far below the roughly 84,000 to 90,000 economists expected, and the unemployment rate rose to 4.2%.
The Nasdaq rose about 1.2% to a record close, while the S&P 500 gained about 0.7%.
Tesla delivered 486,532 vehicles in the third quarter, beating Wall Street's estimate by about 25,000 cars. The stock rose about 4.7%.
Bets on an October rate hike faded fast, with odds falling as low as 12% after the report.
Oil swung lower early, then pared its losses after G7 leaders agreed to release 100 million barrels from emergency reserves.
On Friday morning, the government told Wall Street the job market was stalling.
Wall Street responded by buying.
It sounds backwards. But for weeks, the biggest threat to this market hasn't been a slowing economy. It has been the Federal Reserve. The 10-year Treasury yield climbed to its highest level since 2002 this week on fears the Fed would have to keep raising rates. A weak jobs number was exactly what investors needed to hear.
The Jobs Report Wall Street Wanted
Here is what the Labor Department reported for September:
Payrolls: +29,000, versus about 84,000 expected (Dow Jones consensus)
Unemployment rate: 4.2%, up from 4.1%
Revisions: July and August were revised down by a combined 60,000 jobs. July now shows a loss of 10,000.
Wages: annual wage growth slipped to its slowest pace since May 2021
Restaurants and bars added about 11,000 jobs, roughly a third of the month's total. The rest came mostly from health care, construction and manufacturing.
For the Fed, that is the picture of a labor market losing steam. Rate-hike odds for the Oct. 27-28 meeting fell as low as 12% after the release, before settling near 21%.
That's the "bad news is good news" trade. And Friday, it was in full force.
By the close, the Nasdaq Composite gained about 1.2% to 27,190.86, a record close. The S&P 500 rose about 0.7% to 7,722.72, and the Dow added about 0.5% to 51,176.96. The VIX, Wall Street's fear gauge, fell about 7% to 15.31.
Tesla Beat Every Estimate on the Board
The biggest single-stock story of the day came from Tesla.
Tesla delivered 486,532 vehicles in the third quarter. Analysts surveyed by the company expected 461,974. Tesla beat that average by 24,558 cars and topped every one of the 24 individual forecasts, which ranged from about 422,000 to 482,000.
Deliveries were down about 2% from the record set a year ago, but up from 480,126 in the second quarter. Tesla also delivered about 22,000 more vehicles than it built, which means it worked down inventory.
There was one soft spot. Tesla deployed 13.7 gigawatt-hours of energy storage, below the 15.9 GWh analysts expected, though still the second-best quarter in company history.
Investors cheered. Tesla shares rose about 4.7% to $370.59, cutting into a year-to-date loss of about 21% through Thursday.
The rally reached beyond Tesla. Elon Musk's SpaceX rose about 6% in its own trading Friday, as investors keep pricing in what we've called the before-and-after moment for the space economy.
Tesla reports full third-quarter results after the close on Oct. 21.
Chips Led the Charge
Semiconductors did the heavy lifting. The PHLX Semiconductor Index rose about 2.4%. Broadcom gained about 3.4%, AMD rose about 3% and Arm Holdings jumped about 5% on its role in Nvidia's new AI agent safety platform.
Nvidia finally broke above its May peak, touching a fresh all-time high of about $237.87 during the session, its first record since May. It closed up about 1.3% at $233.95. Morgan Stanley also reinstated Nvidia as its top chip pick. The record came just days after it answered OpenAI's training pause with a record $150 billion buyback.
Bonds and Oil Gave Back Their Early Relief
The 10-year Treasury yield had a wild day. It fell as low as 5.17% right after the jobs report, down from a high of 5.34% on Thursday, the highest since 2002. But it drifted back up through the afternoon and finished near 5.28%, slightly higher on the day. The 2-year yield, the one most tied to Fed policy, ended near 4.83%.
G7 leaders agreed to release 100 million barrels of oil from emergency reserves over four months. Oil prices still swung the same way as bonds. U.S. crude fell more than 4% early, to below $89 a barrel, on the G7 news. It ended down about 1.4% at roughly $91.50. Brent, the global benchmark, finished slightly higher near $103.
Not Everyone Joined the Party
Nike (NYSE: NKE) fell about 3.6% to $33.87 after its sales miss and weak full-year outlook. The stock hit its lowest level since 2013, and Goldman Sachs and Bank of America both cut their targets.
Seagate (NASDAQ: STX) fell about 10% after a report that Toshiba plans to double its hard-drive production capacity for AI data centers.
What Lands Next
Next week: Minutes from the Fed's September meeting come Wednesday, and they could show how close officials are to another hike. PepsiCo reports Thursday, and Delta Air Lines kicks off airline earnings Friday.
Oct. 14: The September consumer price index. After Friday's jobs report, inflation is now the last big hurdle before the Fed's October decision.
For months, the market feared a strong economy would force the Fed's hand. On Friday, it got a weak one, and the Nasdaq went straight to a record. The question now is how long investors can cheer bad news before the bad news starts to show up in earnings.
This article is for informational and educational purposes only and does not constitute investment advice or a recommendation to buy or sell any security.
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