Wall Street got the bit of bad news it was hoping for.

Friday's monthly jobs report showed the U.S. added just 29,000 jobs in September, far fewer than economists expected and well below the prior month's total. The economy, it seemed, might not be growing as rapidly as many had thought.

The stock market's response? Relief. Major U.S. indexes marched higher, putting the Nasdaq composite and the S&P 500 within striking distance of new all-time highs. Investors took the weaker-than-predicted labor data as a sign that the Federal Reserve would hold off on hiking interest rates-at least for now-and that inflationary pressures might not be as aggressive as feared.

"We were due for a relief rally," said Jamie Cox, managing partner at Harris Financial Group. "There needed to be a catalyst, and this jobs report was it." Friday morning's print makes a good case that a rate increase at the Fed's October meeting is off the table, Cox said, and that a December hike is also up in the air.

Traders piled into riskier corners of the markets, juicing gains in shares of chip makers, smaller companies and a range of economically sensitive businesses such as Norwegian Cruise Line and Olive Garden parent Darden Restaurants.

The Nasdaq composite jumped 1.2%, while the S&P 500 advanced 0.7%. The Dow Jones Industrial Average rose 0.5%, or 250 points.

"We're in a sweet spot," said Robert Schein, chief investment officer at Blanke Schein Wealth Management. The labor-market reading "provides relief for [the Fed] to basically fine-tune monetary policy, instead of launching a sustained tightening campaign."

Investors now see a roughly 77% chance that Fed leaders will hold interest rates steady at their meeting this month, according to CME FedWatch data, slightly higher odds than before the release. Interest-rate increases can drag on stock-market returns by raising the cost of capital for businesses and slowing economic growth.

Friday's gains were an upbeat end to what had been another choppy week for equities. September is historically a challenging month for the stock market, and this year was no exception: The S&P 500 and the Dow industrials each ended the month in the red.

The primary culprit, this time around, was a punishing bond selloff powered by rising oil prices, ballooning deficits and resilient economic growth. Earlier this week, yields on 10-year U.S. Treasury notes climbed to their highest level since 2002, a sign that the economy has entered a new era of higher borrowing costs.

Thomas Urano, co-chief investment officer and managing partner at Sage Advisory, said that Friday' s relief rally appeared to be temporary. When it comes to the structural forces driving bond yields higher, he said, "one weak print doesn't change the outcome."

Though Treasury yields declined in early Friday trading, they soon rebounded and ended the day higher. On Thursday, an unwinding of popular hedge fund trades contributed to a selloff in French bonds-and sent investors flocking to seemingly safer government debt, including Treasurys. That move, however, started to play itself out on Friday, contributing to the yield rebound in Treasurys.

After a bumpy month, the next several weeks might prove more favorable for stocks. In the month leading up to a midterm election, the S&P 500 averages a gain of 3.9%, according to Dow Jones Market Data dating back to 1950.

On the other hand, Wall Street now has to grapple with the risk that slower job growth and the Fed's previous rate increase could contribute to a more serious economic slowdown. Investors probably shouldn't worry about a recession just yet, Schein said. But market gains for the remainder of 2026 could rest, in part, on maintaining the careful balance between cool-down and downturn.

"Right now, we're in that Goldilocks environment, as long as the weakness doesn't accelerate," Schein said.