Weak jobs report lifts chips, but yields stay near 5.26%

Friday’s jobs report was far weaker than expected, and stocks rose on it because weak hiring makes another Federal Reserve rate increase less likely. The bond market was less convinced: the 10-year Treasury yield dipped, then climbed back, and it starts the week near 5.26%.

A weak jobs number, and a rally built on it

US employers added 29,000 jobs in September, against the 90,000 economists had forecast, and the unemployment rate rose to 4.2%, per CNBC. Payroll figures for the prior two months were revised sharply lower, per Reuters.

Markets read that as a reason for the Fed to hold off. The Fed raised rates in September, and a week ago futures put the chance of another increase at its October 27-28 meeting at 64.2%. After the report that fell to 22.1%, per CME FedWatch figures cited by Investing.com.

The S&P 500 rose 0.73% to 7,722.72 and the Nasdaq Composite gained 1.2% to 27,190.86, after touching a record high during the session, per CNBC. The Dow added about 0.5% and the small-cap Russell 2000 rose 0.94%, per Saxo.

One good day did not repair the week for every index. The S&P 500 still finished the week down 0.27% and the Dow down 1.26%, while the Nasdaq Composite gained 0.45%, per FX Empire.

The bond market did not keep the relief

This is where the data and the headline part ways. The 10-year Treasury yield briefly fell below 5.17% after the jobs report, then rebounded to about 5.28% as traders weighed oil prices that could keep inflation elevated, per Investing.com. It was near 5.26% overnight, per Saxo, not far from Thursday’s 5.34%, which was a 24-year high.

Our feed shows the same thing from the other side. The long-dated Treasury fund TLT, which falls when long-term yields rise, closed down 0.30% on a day that began with a bond rally. Gold slipped too, with the gold fund GLD down 0.68%.

So stocks rallied on the idea of lower rates while long-term borrowing costs ended the day little changed. Wednesday’s 10-year Treasury auction and Fed minutes are the next scheduled readings on which view holds.

Chips led, and the rally reached past the giants

In our feed, 66 of the 100 stocks and funds we track rose. Another 32 lost ground and two were unchanged. The S&P 500 fund SPY rose 0.74%, the Nasdaq-100 fund QQQ 1.02%, the small-cap fund IWM 0.90% and the Dow fund DIA 0.49%.

Semiconductors did most of the work. The Philadelphia Semiconductor Index rose 2.4%, per Saxo.

Arm (ARM) traded as high as $318.36 before closing at $307.49, up 5.18%.
Texas Instruments (TXN) rose 4.44% to $293.80. The company recently raised its quarterly dividend 7% to $1.52 a share, per Traders Union.
Broadcom (AVGO) gained 3.35%, AMD 2.95% and Applied Materials (AMAT) 2.03%.
Nvidia (NVDA) set an all-time intraday high of $237.88, then gave back most of the move to close at $233.95, up 1.34%.

The buying reached smaller chip companies as well. Among the day’s biggest gainers in our movers feed were MaxLinear, up 15.13%, Synaptics, up 14.10%, Wolfspeed, up 12.87%, Vishay, up 11.44%, and Allegro MicroSystems, up 8.67%. We could not confirm a company-specific reason for each; a Yahoo Finance market note attributed the group’s gains to the early drop in yields after the jobs data.

Not every chip name joined in. Micron (MU) fell 2.05% to $1,074.89, and Intel (INTC) opened at $124.01, traded up to $126.00 and then reversed to close down 0.56% at $119.33. Hard-drive makers were hit harder: Seagate fell about 11% and Western Digital about 10% during the session, with Reuters noting an expansion of hard-drive production by Toshiba.

Elsewhere in tech, Cisco (CSCO) rose 3.16% and Oracle (ORCL) 3.06%.

Tesla up on deliveries; Nike and Spotify down

Tesla (TSLA) rose 4.65% to $370.59 after reporting 486,532 vehicle deliveries for the third quarter, ahead of the 463,761 analysts expected, per Forbes. Deliveries were still down about 2% from a year earlier, per Morningstar.

Nike (NKE) had its first regular session since Thursday night’s results and fell 3.64% to $33.87. That was better than it first looked: the stock traded as low as $31.97 during the day. About 142.6 million shares changed hands, per our feed.

Spotify (SPOT) fell 3.77% to $472.89 after KeyBanc lowered its revenue forecasts for the company, citing slower growth in the ad-supported business, per ad-hoc-news. Coinbase (COIN) fell 3.32% and ServiceNow (NOW) 2.45%. We could not confirm a specific cause for either.

Among the names that usually steady the index, Caterpillar (CAT) rose 2.31% and UnitedHealth (UNH) 1.83%.

Overnight

Japan’s Nikkei 225 rose 2.22% to 69,822.57, helped by AI-related shares, while Hong Kong’s Hang Seng slipped 0.08%, per Saxo. Markets in mainland China and South Korea are closed for holidays, per CNBC.

The euro is the overnight story. It dipped to $1.1161, a 17-month low, as worries about France’s debt persisted, per Saxo and Reuters. The gap between French and German 10-year government bond yields stood at 141 basis points.

Brent crude was near $101.50 a barrel, per Saxo. US stock futures were little changed early Monday, per CNBC. Pre-market trading in our feed is still too thin to read anything into.

What to watch today

The ISM services index for September at 10:00 a.m. ET, including its prices-paid measure. The manufacturing version of that measure jumped to 77.9 last week.
The final S&P Global services PMI for September at 9:45 a.m. ET.
The 10-year Treasury yield, near 5.26% overnight against Thursday’s high of 5.34%.
The euro, which touched $1.1161 overnight.
Brent crude, near $101.50 a barrel.
Later this week: the 10-year Treasury auction and the minutes of the Fed’s September meeting on Wednesday, PepsiCo’s results on Thursday and Delta Air Lines’ on Friday.

Not financial advice. iTrading Buddy summarizes publicly available market data and news; every figure above is sourced from the reporting available before the US open on the date shown. Verify anything you act on.