U.S. stock markets approached record highs on Friday as the latest employment report eased concerns about an overheating economy driving inflation higher. The S&P 500 increased by 0.7 percent, nearing within 1 percent of its August peak. The Dow Jones Industrial Average added 250 points, or 0.5 percent, while the Nasdaq composite climbed 1.2 percent.
The upward movement came after government data showed that employers nationwide added a net 29,000 jobs last month, a figure that was both below economists’ expectations and a marked slowdown from August’s net gain of 133,000 positions. Market participants interpreted the softer pace of job growth as a sign that inflation pressures may not intensify as much as feared.
Inflation has remained elevated in the United States, prompting the Federal Reserve to raise its benchmark interest rate for the first time in three years in an effort to control rising costs. Despite this, the broader economy has demonstrated resilience. Earlier reports indicated that U.S. economic growth during the spring was stronger than initially estimated, driven particularly by increased business investment in artificial intelligence data centers and steady consumer spending.
Friday’s subdued employment figures led traders to scale back expectations for another interest rate hike at the Federal Reserve’s upcoming meeting. Current market data suggest less than a 23 percent probability of a rate increase in October, a significant drop from 64 percent just a week earlier. Adam Shickling, senior economist at Vanguard, noted that the labor market “has not deteriorated sharply, but there is also little evidence that it has meaningfully strengthened,” supporting a case for policymakers to await further data.
The decline in rate-hike expectations helped stabilize bond markets, with the yield on the 10-year U.S. Treasury note briefly falling below 5.17 percent, down from nearly 5.35 percent on Thursday. Lower yields generally reduce borrowing costs, which can support economic activity and asset prices, while higher yields tend to weigh on stocks and other investments.
Global factors continue to influence market dynamics, including volatile oil prices amid uncertainty over the impact of ongoing conflict in the Middle East. Brent crude ended the session at $102.25 a barrel after fluctuating between $98 and $103. Meanwhile, concerns about high government spending and mounting national debts are sustaining elevated bond yields across several countries. France, in particular, faces market volatility linked to its record debt levels and budgetary challenges.
In individual stock movements, Tesla shares rose 4.7 percent following the company’s announcement of delivering 486,532 vehicles in the most recent quarter, exceeding analyst expectations. Gains in the technology sector also bolstered market performance, with Nvidia’s 1.3 percent increase standing out. As the most valuable U.S. company, Nvidia’s stock exerts considerable influence on the S&P 500 index.
Overall, Friday’s data and market responses suggest a cautious optimism among investors as they weigh the prospects for economic growth and inflation amid evolving domestic and global conditions.