(Updates with index/price moves and macroeconomic data from the first paragraph.)
US equity indexes advanced after a substantial miss in nonfarm payrolls lowered the odds of a back-to-back monetary policy tightening in October while crude oil prices slumped.
The Nasdaq Composite jumped 1.2% to 27,202.8, the S&P 500 climbed 0.7% to 7,722.9, and the Dow Jones Industrial Average advanced 0.4% to 51,111.3 after midday Friday. All but three sectors rose, with consumer discretionary, materials, technology and communication services leading the gainers.
The September employment report from the Bureau of Labor Statistics showed nonfarm payrolls rose by 29,000, below the 90,000 increase expected in a Bloomberg-compiled survey, while August jobs were revised downward to a 133,000 increase and July payrolls were adjusted lower to a 10,000 decrease, for a net reduction of 60,000 jobs.
Hourly earnings rose 0.1%, missing expectations for 0.3% growth and the 0.3% increase in August. Hourly earnings climbed 3.0% from a year ago, slower than August's 3.1% year-over-year gain.
"A weaker-than-expected payroll report reinforces the Fed's more cautious approach to rate hikes," Lindsey Piegza, Stifel's Chief Economist, said in a note. "Despite the potential need for significantly higher rates to tame dangerously elevated inflation, indications of a softer labor market will likely embolden the Committee to slow-play any further adjustments higher in rates."
New orders for US factory goods rose 0.1% in August, below expectations of a 0.2% increase in a Bloomberg-compiled survey and a revised 0.8% increase in the previous month. Excluding a 0.7% decline in transportation orders, new orders would have been up 0.3% after a 0.7% increase in July.
Traders slashed the probability of the Federal Reserve raising its target rate by 25 basis points in October to 22% from 24% a day ago and 64% a week earlier, according to the FedWatch tool. The remaining 78% likelihood is that rates will remain unchanged in the 3.75% to 4.00% range.
The front-month US West Texas Intermediate crude oil contract dropped 2.5% to $90.53 per barrel, and the global benchmark North Sea Brent dropped 1.1% to $101.22 per barrel after the G7 agreed to release 100 million barrels of energy reserves "immediately over 4 months" to ease price pressures. The plan includes a "frontloaded substantial diesel release within the first 20 days" by G7 members and partners, per a G7 statement.
In company news, Nike (NKE) shares slumped 5.5%, the Dow's steepest decliner, after the sportswear giant forecast a fiscal 2027 revenue decline and unveiled a plan to transform its operating model.