September Payrolls Slump to 29,000 as Nasdaq Hits Record on Lower Hike Odds
U.S. employers added 29,000 jobs in September, down from 162,000 in August, and the Nasdaq Composite hit a record on October 2 as traders cut bets on a Federal Reserve rate hike.
The Bureau of Labor Statistics released the September Employment Situation report on October 2 at 8:30 a.m. The payroll number came from the employer survey published as Employment Situation Summary. Timing followed the normal schedule on the BLS release calendar. Futures and stocks repriced that morning.
The jobless rate was 4.2 percent in September, changing little, with 7.1 million unemployed, also changing little, according to the Bureau of Labor Statistics.
As of 11:38 a.m. ET on October 2, the Nasdaq was up 1.18% to 27,191, a record high, as reported by Motley Fool. Separate coverage put the gain at 1.2% as traders pared rate-hike bets, according to Yahoo Finance. Gains centered on growth shares.
On October 2, traders saw a 20% chance of a 25 basis point hike in October, or a quarter point, down from 26% before the report, according to Yahoo Finance. The Wall Street Journal, in live coverage titled 'Jobs Report Today: Stocks Jump as Hiring Softens,' reported a cooling job market makes the Fed less likely to raise rates at coming meetings.
Employers added 162,000 jobs in August, as reported in the Journal's September 4 coverage. After that report, investors saw a 60% chance the Fed will raise rates this month, up from 52% before, as reported by The Wall Street Journal. Earlier, investors saw a 42% chance of a September hike, down from 55% before that report, citing CME Group data, as reported in the Journal's August 7 coverage. The October 2 coverage is at The Wall Street Journal.
The broader context here is how much one payroll number now moves markets. Hike odds fell after the July-report cycle, jumped after August, then fell again after September, a full round trip. A 133,000 drop in the headline, from 162,000 to 29,000, lined up with a six-point fall in October hike odds and a gain of more than 1% to new highs. Weaker hiring meant lower expected rates and higher stock values, mostly in rate-sensitive growth. For savers and borrowers, that link matters because expected Fed moves feed into loan rates and stock values like a thermostat.
In my view, the risk is whipsaw. Two straight reports pushed hike odds in opposite directions by double-digit and mid-single-digit moves. Unemployment stayed at 4.2%, with 7.1 million unemployed, changing little, a mixed signal of slower hiring without higher joblessness. Until the Committee clarifies its reaction function, the next payrolls will carry the same weight for short-term rate bets and growth stocks.
