US Stocks Climb to Record Highs Following Weak Jobs Report

US stock indexes advanced on Friday as a weaker-than-expected jobs report cooled expectations for a near-term interest rate hike by the Federal Reserve. The Nasdaq Composite climbed to an intraday record high, supported by lower Treasury yields and falling oil prices alongside strong gains in semiconductor and megacap stocks like Nvidia and Tesla.

Market Details

The Labor Department reported that nonfarm payrolls increased by 29,000 jobs last month, falling well below the 90,000 estimate from economists polled by Reuters, while figures for the prior two months saw sharp downward revisions. This sluggish data reduced market expectations for a rate hike of at least 25 basis points at the Fed's upcoming meeting to 23.8%, down from 64.2% just a week earlier. Robert Bernstone, head of trading at SummitTX Capital in New York, noted that while the news shows the economy is not overheating and removes short-term rate hike pressures, investors still hold cautious optimism amid lingering concerns over inflation and overall economic health. The Dow Jones Industrial Average rose 217.14 points to 51,143.70, the S&P 500 gained 53.99 points to 7,720.44, and the Nasdaq Composite added 307.48 points to reach 27,179.15. Smaller companies also fared well, with the Russell 2000 index gaining about 1% for its biggest daily advance in a month. Meanwhile, Nike shares tumbled 4.5% after the sportswear giant warned of a surprise revenue drop due to weak demand in China, announced job cuts, and planned global business division changes. Data storage providers also slumped, with Western Digital and Seagate Technology falling roughly 10% and 11% respectively after a report that Toshiba plans to double its hard disk production capacity for AI data centers.

Context

Stock markets often react strongly to employment and inflation data because these figures dictate the future path of central bank interest rates. When economic growth cools, investors frequently bet that borrowing costs will remain low or decrease, which tends to boost asset prices despite underlying business challenges.