US stock futures climbed on Friday as investors digested a key monthly jobs report that showed hiring remains robust in the US economy. The Middle East crisis and a return to work at US ports also stayed in high focus.
S&P 500 futures (ES=F) put on 0.5%, while Dow Jones Industrial Average futures (YM=F) added roughly 0.3%. Contracts on the tech-heavy Nasdaq 100 (NQ=F) moved 0.7% higher.
The September jobs report massively overshot expectations, as the US economy added 254,000 jobs last month and the unemployment rate dipped down to 4.1%. All together, the report showed the labor market remains robust, even amid signs it has cooled. Yahoo Finance’s Josh Schafer has more details on the report here.
The jobs report swung bets toward a smaller rate cut from the Federal Reserve next month. Over 90% of bets are on a 0.25% cut, as opposed to a larger, 0.50% cut, according to the CME FedWatch Tool.
Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards
Stocks are looking to recoup weekly losses, as the markets have shown some resilience in the face of a rough week of worrying headlines. The major gauges were off 1% or less as of Thursday’s close, with the S&P 500 and Dow still within striking distance of record highs.
In recent days, a huge ports strike, devastation from Hurricane Helene, and the prospect of a wider Mideast conflict brought the potential to lift prices and fan inflation.
In a welcome move, the US dockworkers strike ended after a tentative wage deal was agreed late Thursday, though some issues remain to be settled by later this year.
On the downside, a barrage of strikes by Israel on Beirut kept alive the Mideast worries that have driven up oil prices. Western leaders warned about “uncontrollable escalation” as investors waited to see whether Israel will attack Iran’s oil facilities — a move President Biden said is under discussion.
Oil is on track for its biggest weekly gain in two years as tensions mount. Brent crude (BZ=F) and West Texas Intermediate (CL=F) futures rose over 1% on Friday morning, coming off a 5% gain the previous day.
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Markets move to price in less Fed easing after strong jobs report
A far stronger-than-expected September jobs report has tilted markets to price in fewer interest rate cuts from the Federal Reserve in 2024.
Following the report, markets were pricing in a roughly 10% chance the Fed cuts interest rates by half a percentage point in November, down from a 53% chance seen a week ago, per the CME FedWatch Tool.
Robert Sockin, Citi senior global economist, told Yahoo Finance that the better-than-expected jobs report makes it less likely the Fed moves with the “urgency” it did at its September meeting when the central bank cut interest rates by half a percentage point.
“This pushes the Fed out a lot,” he said, adding that it’s uncertain the Fed will make a 50-basis point cut again this year.
“Looking at the labour market strength evident in September’s employment report, the real debate at the Fed should be about whether to loosen monetary policy at all,” Capital Economics chief North America economist Paul Ashworth wrote in a note to clients on Friday. “Any hopes of a [50 basis point] cut are long gone.”
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September jobs report crushes expectations as US economy adds 254,000 jobs, unemployment rate falls to 4.1%
The US labor market added far more jobs than projected in September while the unemployment rate unexpectedly ticked lower, reflecting a far stronger picture of the jobs market than Wall Street had expected.
Data from the Bureau of Labor Statistics released Friday showed the labor market added 254,000 payrolls in September, more additions than the 150,000 expected by economists.
Meanwhile, the unemployment rate fell to 4.1%, from 4.2% in August. September job additions came in higher than the revised 159,000 added in August.
