Stocks gain, dollar falls after US jobs data; bond yields higher

Major stock indexes climbed and the dollar slipped on Friday as lower-than-expected US jobs data led to expectations of a Federal Reserve rate hike later in the month falling away. The US nonfarm payrolls figure rose by 29,000 jobs last month, after a downward revision from 133,000 in August, according to the Labor Department. Economists surveyed by Reuters had anticipated payrolls increasing by 90,000.

Forecasts of a second rate increase from the Fed this month waned after the data, with traders now estimating a roughly 21% chance of a 25 basis point hike in October, compared to about 26% before the report. The market remained receptive to the possibility of a December rate hike, based on LSEG's assessment. While the labor market was not as robust as August's figures, Neuberger's Joseph Purtell described it as "stable" and said the report did not alter that perspective.

The Nasdaq hit a record high early and was up over 1% at the close, contributing to bullish sentiment. The Dow Jones Industrial Average gained 168.55 points (0.34%), the S&P 500 rose 52.03 points (0.68%), and the Nasdaq Composite climbed 306.18 points (1.14%). Global stock indices, including MSCI's broad market gauge, also saw gains.

The US dollar weakened against the euro and yen, with the euro rising 0.12% to $1.1255 and the dollar falling 0.2% to 157.76 against the yen. Bond yields surged after the jobs report, with the 10-year US yield increasing to 5.256%. Global bond markets had been experiencing a sustained decline, partly due to rising energy prices and geopolitical tensions from the US-Israeli conflict with Iran.