Stocks rallied Friday even after the release of stronger-than-expected U.S. jobs data and a pop in Treasury yields.
The Dow Jones Industrial Average gained 288.01 points, or 0.87%, to close at 33,407.58. The S&P 500 added 1.18% at 4,308.50. The tech-heavy Nasdaq Composite rose 1.60%, closing at 13,431.34.
The U.S. economy added 336,000 jobs in September, the Labor Department said. Economists polled by Dow Jones expected 170,000 jobs. To be sure, wages rose less than expected last month.
Stocks posted a stunning turnaround on Friday, after initially falling on the stronger-than-expected jobs report. At its session low, the Dow had fallen as much as 272 points; it surged by more than 400 points at the height of the rally. The Nasdaq and the S&P 500 slid by 0.9% during their lowest points in the day.
Traders were unclear of the reason for the intraday reversal. Some noted it could be the softer wage number in the jobs report that made investors rethink their earlier bearish stance. Others noted the pullback in yields from the day's highs. Part of the rally may just be to do a market that had gotten extremely oversold with the S&P 500 at one point this week down more than 8% from its high earlier this year.
Yields initially surged after the report, with the 10-year Treasury rate trading near its highest level in 16 years. The benchmark rate later eased from those levels, but was still up around 6 basis points at 4.78%.
"We're seeing a little bit of a give back in yields from where we were around 4.8%. [With] them pulling back a bit, I think that's helping the stock market," said Megan Horneman, chief investment officer at Verdence Capital Advisors. "We've had quite a bit of weakness in the market in recent weeks, [and] some oversold conditions."
"There is likely enough good news from wage growth and the unemployment rate to keep the Fed from returning to rate hikes. While market expectations about what the FOMC will do have shifted a bit after digesting this morning's report, there is still a strong expectation that rates will remain unchanged in November," said Dante DeAntonio, labor economist at Moody's Analytics.
Technology shares led the S&P 500's sector gains on Friday, gaining 1.94%. Monolithic Power Systems, Advanced Micro Devices and Palo Alto Networks all jumped more than 4%.
Ford advanced 0.84% and GM gained 1.95%. The action came after the United Auto Workers union said there would be no new strikes this week because of progress in talks with automakers.
The S&P 500 ended the week up 0.48%, breaking a four-week negative streak. The Nasdaq also notched a positive week, climbing 1.60%. Meanwhile, the Dow closed down 0.30% for the week.
Fundstrat's Tom Lee thinks equities are in good shape with improving economic momentum and potentially diminishing inflation.
"If inflation is diminishing next year and people think the Fed is done or might cut, that's good because bonds could rally…if that happens, we know p/e is gonna go up a lot, so stocks will rally even more," Lee, head of research at Fundstrat Global Advisors, said Friday on CNBC's "Closing Bell."
Lee added that strong earnings growth in the third quarter from S&P 500 companies—excluding headline earnings that are still down year-over-year with energy and basic materials—is a signal that the total return profile of equities can trump that of bonds.
He forecasted more than double-digit gains for the broader index over the next 12 months.
— Pia Singh
U.S. stocks ended Friday's trading session in the green.
The Dow Jones Industrial Average rose 288.01 points, or 0.87%, to close at 33,407.58.
The S&P 500 gained 1.18% at 4,308.50, and the Nasdaq Composite was higher by 1.6% at 13,431.34.
— Hakyung Kim
A soft inflation reading in the week ahead after Friday's jobs report could be the signal stocks need to turn around after their recent carnage from rising bond yields.
"I'm very bullish right now," Jim Lebenthal of Cerity Partners said Friday on CNBC's "Halftime Report." "Once we get the CPI, PPI, if those numbers come out good, then we're going to stop talking about the Fed."
CNBC Pro subscribers can read the full story here.
— Sarah Min
The S&P 500's information technology and communications services sectors are on pace to post the best weekly performances within the broad-based index.
Both sectors have gained more than 3% week to date, led to the upside by technology mega caps, software stocks and popular chipmakers.
Arista Networks and Palo Alto Networks are on pace to post the best weekly performances within the information technology sector, with both software stocks up nearly 6% each. Nvidia and Intuit are on track for a 4.8% and 4.4% weekly gain, respectively.
Live Nation Entertainment is the best performer within the communication services sector, jumping nearly 6% week to date. Alphabet's added more than 5%, while Meta Platforms is on track for a 4.5% gain.
— Samantha Subin
Soaring payrolls in September are yet another reason many investors are expecting a soft landing for the economy, but the numbers may not be enough to stop additional rate hikes, according to Shannon Saccocia
Saccocia, chief investment officer of NB Private Wealth, told CNBC on Friday that continued consumer strength, as seen by a jump in employment levels, easing CPI numbers and rosier economic projections from the Federal Reserve all point to signs that the economy is in decent shape. She noted, however, that Friday's jobs report does not entirely erase concerns about a deeper recession or higher-for-longer rates heading into 2024.
"I think this digestion and repricing is going to continue, but likely moreso into 2024, just given where we are cyclically in the market cycle," Saccocia said on CNBC's "Halftime Report."
— Pia Singh
Stocks of the automakers facing of with the United Auto Workers union advanced Friday afternoon after union leadership said its strike wouldn't expand.
General Motors and Stellantis each climbed more than 2%, while Ford added around 1.5%.
The UAW has enacted a "stand-up strike," meaning it targets a handful of locations rather than having all members stop work at once. The union has been incrementally increasing the number of strikes since a tentative agreement wasn't reached between the parties in mid September.
— Alex Harring
The unemployment rate ticked down among Hispanic workers in September, according to the latest data from the U.S. Department of Labor.
The jobless rate fell to 4.6%, down from 4.9% in August.
Read more on the latest jobs report and what it showed for different demographic groups here.
— Samantha Subin
The S&P 500 continued trading in proximity to 4,200, a key level Wall Street is watching for a handful of technical reasons. As of midday Friday, the index hovered around 4,296.
"The S&P is at a confluence of support," said John Kolovos, chief technical strategist at Macro Risk Advisors. "It's a defining moment for the index."
CNBC Pro subscribers can see what those reasons are and what technical analysts think could happen if its challenged by clicking here.
— Alex Harring
Amazon is lagging behind other members of the so-called "magnificent seven" tech stocks.
Shares of Amazon are flat on the week, despite rising about 1% on Friday, and down 6% over the past month.
For comparison, the CNBC Magnificent 7 Index is up more than 3% this week and down just 1% over the past month.
— Jesse Pound
Despite muted moves in Friday's session, oil prices were on pace to record their biggest weekly loss since March.
Both Brent and West Texas Intermediate crude futures were around flat on Friday. But on the week, Brent and WTI were on track to end down 11.7% and 9.3%, respectively. That's the worst weekly performance since March for both.
Oil prices were on track on Friday to post their steepest losses in a week since March, after another partial lifting of Russia's fuel export ban compounded demand fears due to macroeconomic headwinds.
The drop comes as concerns around demand mount, with industry experts concerned about the impact of high interest rates.
— Alex Harring
These are some of the stocks making the biggest midday moves on Friday:
— Alex Harring
Formula One Group could rally as "overblown" investor concerns around its Las Vegas Grand Prix and sports renewals deals pare down, according to Citi.
The firm upgraded shares of F1 to a buy rating on Friday. The stock is overall up 17.7% since January but has faced increased volatility so far this year.
"Based on our estimate of Vegas's race economics, we believe F1′s new capex guide extended the payback period by ~3 years," analyst Jason Bazinet wrote. "Ultimately, we are not overly concerned by the extra capex, as the Vegas event could help drive U.S. engagement by bolstering media rights revenue."
— Lisa Kailai Han
Bearishness among retail investors over the outlook for stocks across the next six months rose for a third straight week, climbing to 41.6% from 40.9% last week, according to the latest survey from the American Association of Individual Investors. The historical average for bears is 31.0%.
But optimism also rose, increasing to 30.1% from 27.8%. Bullishness is below its historical average of 37.5% for the seventh week in eight.
The percent of those investors who told the AAII they were neutral on stocks narrowed to 28.3% from 31.3% last week.
Contrarian investors look to a surge in pessimism as a signal that market risk has declined. The past year's peak in bearishness, for example, came in mid-October 2022, when 56.2% of investors said they were pessimistic. Stocks soon began to rebound. Conversely, the S&P 500 high in 2023 came on July 31, less than two weeks after the AAII said investor bullishness reached a 52-week high of 51.4%.
— Scott Schnipper
Waning pandemic-related tailwinds for auto parts retailers will undermine sales and earnings prospects for O'Reilly Automotive, according to Oppenheimer.
The firm downgraded the stock to a perform rating from outperform, simultaneously lowering its price target to $930 from $1,000. Year to date, the stock is up 6.7%.
"While current Street forecasts for AZO and ORLY appear largely reasonable, we are now more hard-pressed to envision multiples for shares climbing meaningfully from current levels," analyst Brian Nagel wrote.
— Lisa Kailai Han, Michael Bloom
The stronger-than-expected September jobs data doesn't bode well for investors hoping the Federal Reserve can start cutting interest rates anytime soon, said Michelle Culver, portfolio strategist at Global X ETFs.
"Unfortunately for markets, this reading reflects there could be more the Fed needs to do to contain inflation pressures," Culver said.
"Long dated yields continued their march higher as this reading reiterated the message of yields potentially needing to remain higher for longer," she added. "While encouraging for the resilience of the U.S. economy, this exceptionally strong reading is a challenge for markets."
— Alex Harring
ETFs tied to municipal and inflation-protected bonds hit new multi-year lows on Friday as traders reacted to the strong jobs report.
The iShares National Muni Bond ETF (MUB) hit its lowest level since March 2020. Meanwhile, the iShares TIPS Bond ETF (TIP) and the SPDR Portfolio TIPS ETF (SPIP) both fell to levels not seen since 2009.
— Alex Harring, Gina Francolla
The stronger-than-expected jobs report was fueled by a big month for the leisure and hospitality sector as well as government hiring.
Those were the top two categories for job growth in September, both up sharply from August, according to the Bureau of Labor Statistics.
The information sector, however, lost 5,000 jobs.
Read more about job growth by sector here.
— Jesse Pound
The beaten-down utilities sector isn't seeing any relief. The Utilities Select Sector SPDR Fund is down 1.3% Friday, and has dropped nearly 20% for the year through Thursday.
The sector has been dragged down by energy and power companies AES Corp, NextEra Energy and Eversource Energy. Utilities posted large declines this week and has lost 20% year-to-date, making it this year's biggest loser so far.
Utilities are seen as bond proxies because of their high dividend yields. The stocks have been getting hit as the high rates in risk-free short-term Treasuries offer an attractive alternative to investors. U.S. Treasury yields rose again Friday, with the 10-year nearing a 16-year high after stronger-than-expected jobs data.
— Pia Singh
A controversial new eye injection that has caused a rout in Apellis stock could also more than double prices of the biopharma firm, according to JPMorgan.
The bank upgraded Apellis stock to overweight on Friday. Shares gained 4.5% Friday morning.
"Indeed, we view Syfovre as a ~$3B peak potential drug, even with conservative assumptions," analyst Anupam Rama said. "With Syfovre growth largely stemming from the back half of 3Q, we see this as a tailwind heading into 4Q and 2024."
The full story is available to CNBC Pro subscribers here.
— Lisa Kailai Han
30-day fed funds futures pricing data on the Chicago Mercantile Exchange suggest a more than 45% probability that the Federal Reserve will raise its benchmark lending rate by a quarter-point, or perhaps as much as half a point, by the end of its December policy meeting.
On Thursday, the chance of further tightening stood at just 33.1%, according to the CME FedWatch tool. The probability is derived from the actions of traders in interest rate futures markets, the CME says.
— Scott Schnipper