U.S. stocks rebounded sharply on Friday, erasing earlier losses and rallying after a robust September jobs report exceeded market expectations. The strong data has fueled speculation that the Federal Reserve may consider another interest rate hike before the end of the year.
As of 11:24 ET (15:24 GMT), the Dow Jones Industrial Average surged 75 points, or 0.2%, while the S&P 500 advanced by 0.2%, and the NASDAQ Composite climbed 0.3%.
Wall Street had experienced marginal losses in the previous session and appeared poised to end the week with mostly negative results. The Dow, consisting of 30 major stocks, was on track to decline by 1.2% this week, marking its third consecutive week of losses. The S&P 500, a broader market benchmark, was set to decrease by 0.7%, marking its fifth consecutive weekly decline, while the tech-heavy NASDAQ showed relatively flat performance.
The recent weakness in the markets was driven by an upsurge in Treasury yields, which raised concerns about the Federal Reserve’s potential interest rate hikes in 2023, thereby extending the period of higher borrowing costs. The 10-year Treasury yield briefly reached 4.782%, though it had climbed even higher earlier in the trading session.
While futures traders currently anticipate a 71% chance of the Fed maintaining steady rates in November, they now see a 28% probability of a quarter-point rate increase, which is higher than prior to the release of the strong jobs report.
Robust Nonfarm Payrolls Data
The week saw mixed job market data, but overall, the indicators suggested a lingering resilience in labor market conditions that could continue to impact inflation in the coming months. However, the spotlight was on Friday’s vital monthly nonfarm payrolls report, which revealed that the U.S. economy added a significantly larger number of jobs in September than anticipated. Payrolls increased by a remarkable 336,000 last month, well surpassing the 170,000 figure predicted by economists. Furthermore, August’s data was revised to indicate the addition of 227,000 jobs, up from the initial reading of 187,000.
The report also noted a 0.2% month-on-month growth in average hourly earnings, consistent with August figures, while the unemployment rate remained unchanged at 3.8%.
Corporate Developments: Exxon’s Ambitions and Tesla’s Price Cuts
In corporate news, ExxonMobil (NYSE:XOM) is reportedly in discussions to acquire Pioneer Natural Resources (NYSE:PXD), a company with a market capitalization of approximately $50 billion and the leading crude producer in Texas. This potential merger drove Pioneer’s shares up by 10%, though Exxon’s stock dipped by 2.5%. If completed, this merger would mark Exxon’s most significant deal since its merger with Mobil in 1999, solidifying its position as a major player in the Western oil industry.
Meanwhile, Tesla (NASDAQ:TSLA) made headlines by reducing the prices of certain Model 3 and Model Y versions in the United States. This move followed the company’s report of third-quarter deliveries that fell short of market expectations, leading to a 2.3% drop in Tesla’s stock price.
Crude Oil Faces Weekly Decline
Oil prices edged lower on Friday following the release of the strong jobs report, contributing to what is set to be the steepest weekly decline in months. Concerns about a global economic slowdown and its impact on fuel demand weighed heavily on the market. Official U.S. data earlier in the week indicated a significant build in gasoline stocks, signaling a decrease in gasoline demand in the world’s largest consumer.
This week, the U.S. crude benchmark was down by 10%, marking its most substantial weekly loss since April, while the Brent contract was down by over 12%, on track for its most significant weekly loss since March.
