By Sinéad Carew and Amruta Khandekar
(Reuters) – Wall Street’s main stock indexes gained on Friday as bond yields fell sharply as data showed signs of slowing U.S. jobs growth and an uptick in unemployment, boosting hopes that the Federal Reserve is done with its interest rate hiking campaign.
The Labor Department’s report showed nonfarm payrolls increased by 150,000 jobs in October, much less than the expected 180,000 increase, partly due to strikes at Detroit’s Big Three automakers.
Data for the last month was revised lower to show an increase of 297,000 instead of 336,000, while the unemployment rate edged up to 3.9%.
The reading bolstered the view that the Fed had reached the end of its rate hikes. U.S. Treasury yields fell for the fourth consecutive session, with the benchmark 10-year Treasury yield hitting its lowest level in more than five weeks before trading last at 4.5538%.
“Falling interest rates is probably the top catalyst this week,” said Tony Welch, CIO of SignatureFD, Atlanta Georgia, adding the jobs report supported this trend.
“The Fed has had a difficult time getting their monetary policy to actually loosen the labor market,” he said, noting that Friday’s data suggests the market is looser, leading to investors’ “interpretation that the Fed may be done with a tightening cycle.”
Welch also noted that solid earnings reports were helping stocks as companies have expanded profit margins.
All three major Wall Street indexes were on course for their biggest weekly percentage gain in about a year. The Russell 2000 index of small cap companies was on track for its biggest weekly gain since February 2021.
The Dow Jones Industrial Average rose 269.53 points, or 0.8%, to 34,108.61, the S&P 500 gained 47.62 points, or 1.10%, to 4,365.4 and the Nasdaq Composite added 191.77 points, or 1.44%, to 13,485.96.
The tech-heavy Nasdaq was on track for its sixth straight day in the green while the S&P 500 and the Dow looked set for their fifth consecutive session of gains.
Most major S&P 500 sectors traded in the green, led by real estate, up 3%, after hitting its highest since late September. Only the energy sector was losing ground, last down more than 1%.
The small-cap Russell 2000 index was up 2.8%, touching its highest level since Oct. 17.
Megacap stocks were gaining with Nvidia up 3.5% and Alphabet up 1.2% while Microsoft rose 1.6%.
Apple was an outlier, down 1.3% after its sales forecast for the holiday quarter fell short of Wall Street expectations.
Still analysts expect earnings growth of 5.7% for S&P 500 companies in the third quarter, with over 81% of the 403 companies in the benchmark index that have reported profits so far having beaten estimates, per LSEG data.
Meanwhile, the CBOE volatility index touched a fresh six-week low, reflecting easing investor anxiety.
Among major movers, Fortinet dropped 16.5% on a downbeat fourth-quarter revenue forecast.
Block jumped 10.3% after raising its annual adjusted profit forecast.
Advancing issues outnumbered declining ones on the NYSE by a 5.97-to-1 ratio; on Nasdaq, a 3.80-to-1 ratio favored advancers.
The S&P 500 posted 19 new 52-week highs and no new lows; the Nasdaq Composite recorded 46 new highs and 62 new lows.
(Reporting by Sinéad Carew in New York, Amruta Khandekar and Shristi Achar A; Editing by Sriraj Kalluvila, Maju Samuel and David Gregorio)
