Stocks Rally on Fed Bets as Jobs Calm Growth Fears: Markets Wrap

(Bloomberg) -- U.S. stocks gained along with Treasuries after solid hiring data quelled recession fears without crushing the odds of future Federal Reserve easing. The dollar declined.

The S&P 500 rose the most in seven weeks -- though still suffered its third weekly loss -- after payrolls slightly missed estimates for September, while August’s reading was revised upward. Traders trimmed their bets on the results, but the odds still favored a Fed rate cut this month. Chair Jerome Powell did little to change the speculation, saying Friday the economy “faces some risks” but is overall “in a good place.”

Tech paced the advance, with Apple Inc. leading benchmark members amid reports of stronger-than-expected sales of its newest phone. The 10-year Treasury rate dropped for the seventh session in a row, and the dollar fell for a fourth straight day. West Texas oil rose toward $53 a barrel.

“This one comes in pretty close to neutral in terms of the slowdown. It’s not encouraging, it doesn’t look like a re-acceleration in growth, but it also probably puts at bay some of the fears that have come in around the ISM manufacturing and ISM services numbers,” said Luke Tilley, chief economist at money manager Wilmington Trust Corp. in Delaware. “This should make people and investors comfortable that we still have enough job growth to keep consumer spending on the positive side.”

Today’s job numbers followed a string of disappointing economic data this week that had fueled concerns a slowdown in manufacturing could spread to the consumer, and in turn ratcheted up bets that the Fed will reduce rates this month. The burst of rate-cut optimism helped snap a two-day losing streak that reached 3% in the S&P 500 Index Thursday.

Elsewhere, European shares advanced along with the euro. India pulled the trigger on another rate cut on Friday, the fifth in the cycle so far. China remains closed for a holiday.

Here are the main moves in markets:

Stocks

• The S&P 500 Index rose 1.4%, the most since Aug. 16, at 4 p.m. New York time.
• The Nasdaq Composite Index gained 1.4%, while the Dow Jones Industrial Average advanced by 1.4%.
• The Stoxx Europe 600 Index increased 0.5%.
• The MSCI Emerging Market Index gained 0.3%.

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%.
• The euro rose by 0.1% to $1.0980.
• The British pound slid 0.3% to $1.2295.
• The Japanese yen rose 0.1% to 106.87 per dollar.

Bonds

• The yield on 10-year Treasuries fell two basis points to 1.51%.
• The yield on two-year Treasuries added two basis points to 1.41%.
• Germany’s 10-year yield advanced less than one basis point to -0.58%.
• Japan’s 10-year yield sank two basis points to -0.211%.

Commodities

• West Texas Intermediate crude fell 0.5% to $52.16 a barrel.
• Gold was steady at $1,513.90 an ounce.

--With assistance from Charlotte Ryan and Yakob Peterseil.

To contact the reporters on this story: Randall Jensen in New York at rjensen18@bloomberg.net;Sarah Ponczek in New York at sponczek2@bloomberg.net

To contact the editor responsible for this story: Jeremy Herron at jherron8@bloomberg.net

©2019 Bloomberg L.P.