Nasdaq rises 1%, Dow, S&P close higher as weak jobs data tempers rate hike bets

U.S. equities saw a rise on Friday as a less-than-expected jobs report dampened hopes that the Federal Reserve would raise interest rates during its upcoming meeting. The S&P 500 climbed 0.76% to 7,724.38, the Nasdaq Composite surged 1.19% to 27,191.33, while the Dow Jones Industrial Average edged up 0.51% to 51,186.71. Nonfarm payrolls added 29,000 last month, well below the 90,000 forecast by economists, with prior months also revised downward.

Following the weak data, traders reduced their expectations of a rate hike at the Fed's late-October meeting to 22.7% from 24.4% the previous day and 64.2% a week earlier, according to CME FedWatch. SummitTX Capital's Robert Bernstone noted a sense of "cautious optimism" as investors reassessed the likelihood of another rate increase, though economic and inflation concerns remained.

Rate-sensitive shares performed well, with the S&P 500 real estate index up about 1% and the small-cap Russell 2000 gaining roughly 1%, marking its strongest daily performance in a month. Nvidia and Tesla were among the top contributors to the S&P 500's gain, with Tesla's rise boosting the consumer discretionary sector by nearly 1%, the best-performing among the 11 major S&P sectors.

Despite the Friday gains, both the Dow and S&P 500 recorded their fourth weekly decline in the past five weeks. However, the Nasdaq ended higher for the week, marking its fifth weekly gain in six sessions. Nike shares fell after the company predicted a sharp annual revenue decline, citing weakness in China and plans to reorganize its global business divisions.

Additionally, data-storage stocks such as Western Digital and Seagate Technology were among the weakest performers in the S&P 500 technology index following reports that Toshiba plans to double its hard drive production capacity for AI data centers by fiscal 2027.