Stock Market Update

[BRIEFING.COM] The stock market has traded higher following a jobs report that showed strong hiring in September. There was also a drop in unemployment and an increase in average hourly earnings. The S&P 500 trades 0.6% higher, the Nasdaq Composite trades 0.9%, and the Dow Jones Industrial Average sports a 0.5% gain.

The jobs report was consistent with the market's soft landing narrative, which led to a recalibration in rate cut expectations due to the notion that the Fed won't have to be as aggressive going forward compared to the September meeting. 

There is now a 0.0% probability of a 50 basis points rate cut at the November FOMC meeting, down from 32.1% yesterday and 53.3% one week ago, according to the CME FedWatch Tool. The fed funds futures market now sees a 4.9% probability of the Fed holding rates steady in November, up from 0.0% yesterday and one week ago. 

Relatively broad buying interest has many stocks participating in upside moves, but some early buyer enthusiasm has dissipated from the market. Advancers led decliners by a nearly 2-to-1 margin at the NYSE and by a 5-to-2 margin at the Nasdaq shortly after the open. Now, advancers have a 3-to-2 lead over decliners at the NYSE and a 2-to-1 lead at the Nasdaq.

Ongoing strength in semiconductor-related names, which outperformed the broader market yesterday, has boosted index performance today. The PHLX Semiconductor Index (SOX) trades 1.3% higher. NVIDIA (NVDA 124.45, +1.60, +1.3%) and Broadcom (AVGO 175.65, +3.76, +2.2%) are building on their recent gains. NVDA shares are 2.3% higher than last Friday's close and AVGO shares are 1.5% higher this week.

Treasury yields shot higher in response to the jobs data. The 10-yr yield at 3.87% just before 8:30 ET, sits at 3.97% now. The 2-yr yield, at 3.73% just before the data, sits at 3.91% now. This price action has kept buying in check in the equity market, and has weighed down the rate-sensitive real estate (-0.9%) and utilities (-0.6%) sectors. 

Reviewing today's economic data:

• September Nonfarm Payrolls 254K (Briefing.com consensus 135K); Prior was revised to 159K from 142K, September Nonfarm Private Payrolls 223K (Briefing.com consensus 125K); Prior was revised to 114K from 118K, September Avg. Hourly Earnings 0.4% (Briefing.com consensus 0.3%); Prior was revised to 0.5% from 0.4%, September Unemployment Rate 4.1% (Briefing.com consensus 4.2%); Prior 4.2%, September Average Workweek 34.2 (Briefing.com consensus 34.3); Prior 34.3
  • The key takeaway from the report is that the labor market is in a solid position to keep the U.S. economy on a growth trajectory.