Nasdaq Hits New High as Weaker Jobs Data Temper Fed Rate Hike Expectations

US equity markets advanced on Friday, with the Nasdaq Composite climbing to an all-time high. The gains followed weaker-than-anticipated US jobs data, which eased concerns about an immediate increase in Federal Reserve interest rates. Alongside falling Treasury yields and lower oil prices, investor sentiment shifted towards riskier assets, supporting the broad market rally.

The Dow Jones Industrial Average added 306.78 points, or 0.60%, finishing at 51,233.34. The S&P 500 rose 78.31 points, or 1.02%, closing at 7,744.76. Meanwhile, the Nasdaq Composite surged 447.84 points, or 1.66%, to end the session at 27,319.43, marking a record high for the technology-heavy index.

Despite the overall market strength, Nike shares dropped sharply, declining 5.6%. The athletic apparel giant warned of a significant yearly revenue decrease and announced plans to cut jobs as part of a global restructuring effort aimed at streamlining its operations.

Technology and semiconductor stocks led the charge on Wall Street. Nvidia shares rose 2.5%, touching an intraday record high. The Philadelphia Semiconductor Index jumped 3.1%, reflecting strong investor demand for chipmakers. Other notable gains included SpaceX, which climbed 5.5%, Tesla up 4.1%, and Oracle adding 3% to its share price.

The Labor Department reported that US nonfarm payrolls increased by just 29,000 in September, significantly below economists’ expectation of 90,000. Additionally, payroll figures for July and August were revised downward, indicating a softer labor market than previously thought.

Todd Schoenberger, chief investment officer at CrossCheck Management, commented on the report, saying, "The lower jobs print, including the revision, is, oddly enough, good news for stocks. With the bond market organically doing the job of the Fed recently, we needed to sacrifice a headline metric and this morning's report accomplished the goal." His remarks highlight how the softer employment data reduced pressure on the Federal Reserve to raise interest rates soon.

Several economic indicators recently have pointed to steady economic activity and inflation easing more than expected. Combined with remarks from at least two senior Fed officials opposing further rate hikes, market participants have scaled back bets on a rate increase at the upcoming Federal Reserve meeting.

Markets now assign just a 20% probability to a 25-basis-point rate hike in October, down from 26% before the jobs data release. Correspondingly, the two-year US Treasury yield, which is sensitive to monetary policy expectations, declined for a second day in a row.

Oil prices also contributed to the positive mood. Brent crude slipped below $100 per barrel after reports emerged that the European Union discussed releasing additional diesel and crude reserves. This development came despite ongoing tensions in the Middle East, which have kept energy markets on alert.

Investor anxiety eased as well, with the Cboe Volatility Index (VIX), often called Wall Street's fear gauge, dropping to a one-week low of 15.67 points. Lower volatility readings typically indicate calmer market conditions and increased investor confidence.

Among the S&P 500 sectors, ten of eleven posted gains. Consumer discretionary and technology sectors outperformed, while healthcare lagged the rest. Fair Isaac declined 1.5% after news that US housing regulators might relax mortgage credit-data rules for government-sponsored enterprises Fannie Mae and Freddie Mac.

Cryptocurrency-related assets also reflected a risk-on sentiment. Bitcoin climbed 3.4%, while shares of Coinbase and Strategy each rose about 3.1%.

Market breadth was broadly positive. On the New York Stock Exchange, advancing stocks outnumbered decliners by a ratio of 3.27-to-1. On the Nasdaq, the ratio stood at 2.5-to-1. The S&P 500 saw nine new 52-week highs but also 14 new lows. The Nasdaq recorded 35 new highs alongside 100 new lows, indicating some divergence among individual stocks despite the overall market strength.

This market activity illustrates how economic data and central bank policies continue to influence investor behavior. The soft jobs report and easing inflation signals have reduced pressure on the Federal Reserve, encouraging investors to seek growth opportunities, especially in technology and semiconductors. However, corporate earnings warnings, such as Nike's, serve as reminders that challenges remain for some sectors.