Stocks Jump, Yields Fall as Weak Jobs Print Cools Fed Outlook — Update

By Joe Stonor

Stock futures jumped and Treasury yields pulled back sharply from multidecade highs after weak U.S. jobs data encouraged expectations the Federal Reserve won't raise rates later this month.

Nonfarm payroll data for September showed the U.S. economy added 29,000 jobs, well below the 84,000 analysts expected. The unemployment rate rose to 4.2%. The cooler-than-forecast print prompted a sharp uptick in expectations the Fed won't hike in October, with markets now pricing an 83% likelihood the central bank holds rates.

"This will reinforce the impact of recent Fedspeak in calming expectations about an October rate hike," wrote economist Mohamed El-Erian, former head of Pimco, in a post on X.

Major U.S. indexes took immediate encouragement from the data. Futures for the Dow Jones Industrial Average and the S&P 500 both rose by around 1%, while Nasdaq futures added 1.4%.

Treasury yields fell sharply. Ten-year yields dropped 5.8 basis points to 5.184%, while 30-year yields fell 5 basis points to 5.570%. Moves were most acute at the shorter end of the yields curve, with two-year yields dropping 7.1 basis points to 4.731%. Treasurys also benefited from their safe-haven status amid stress in European bonds. The spread between French and German 10-year sovereign bond yields jumped to its highest since November 2011, as investors worried about the progress of the French budget.

A pullback in oil prices also helped Treasurys, with front-month Brent crude contract for December falling 2.7% to trade around $99.50 a barrel. Encouraging signs that Gulf crude exports are recovering weighed on prices, though fears of escalation persist. The U.S. is sending a third aircraft carrier and additional ships to the region, The Wall Street Journal reported. The physical market remains tight as traders continue to watch for a potential U.S. ban on diesel exports.

Asian stocks fell back overnight, with Hong Kong's Hang Seng dropping 2.6% on its return from a trading break. The Japanese Nikkei 225 fell 0.9%. In Europe, stock indexes were higher after dropping sharply in the last session. The Europe-wide Stoxx 600 is up 0.8%.

In premarket trade, On Semiconductor jumped 7.4% after the company revised a deal for semiconductor group Synaptics. Nike was a big premarket loser, however. Shares in the sports retailer were down 8.1% in premarket trading after the company said declining sales will continue.

The dollar fell sharply against a basket of currencies, buoying nonyielding assets. Bitcoin neared $87,000, while gold contracts jumped 1% to around $4,250 a troy ounce in New York.

Write to Joe Stonor at josephmichael.stonor@wsj.com

(END) Dow Jones Newswires

October 02, 2026 09:39 ET (13:39 GMT)