US Stocks Rise After Weak Payrolls Data Lowers Fed Hike Odds

US equity indexes advanced on Friday following a soft September jobs report that reduced the likelihood of a Federal Reserve rate increase in October. The Nasdaq Composite rose 1.2% to 27,181.2, the S&P 500 climbed 0.7% to 7,720.5, and the Dow Jones Industrial Average gained 0.3% to 51,104.5 after midday trading. Most sectors posted gains, with consumer discretionary, materials, and technology leading the market higher.

The Bureau of Labor Statistics reported that nonfarm payrolls increased by 29,000 in September, falling short of the 90,000 increase expected in a Bloomberg-compiled survey. Previous figures were also revised downward, with August job gains adjusted to 133,000 and July payrolls revised to a decrease of 10,000. These adjustments resulted in a net reduction of 60,000 jobs over the two-month period.

Market participants responded by lowering their expectations for monetary tightening. According to the FedWatch tool, the probability of the Federal Reserve raising its target rate by 25 basis points in October dropped to 22%, down from 24% the previous day and 64% a week earlier. The remaining 78% probability indicates that rates are expected to remain unchanged in the current range of 3.75% to 4.00%.

Crude oil prices declined alongside the equity rally as geopolitical supply measures took effect. The front-month US West Texas Intermediate crude oil contract fell 4.1% to $89.00 per barrel, while the global benchmark North Sea Brent dropped 2.9% to $99.33 per barrel. The price movement followed an agreement by the G7 to release 100 million barrels of energy reserves immediately over four months to ease price pressures. A G7 statement noted that the plan includes a substantial diesel release within the first 20 days by G7 members and partners.

In company news, Nike (NKE) shares fell 6%, making it the steepest decliner on the Dow Jones Industrial Average. The sportswear company announced a forecast for a revenue decline in fiscal 2027 and outlined a plan to transform its operating model.