Stocks Higher On Jobs Report Shock, Debt Ceiling Deal; Oil At $80

On Oct 8, 2021

U.S. stocks swung in-and-out of positive territory Friday, while Treasury note yields held near the highest levels since early June, as investors moved past concern over the debt ceiling while parsing details of a disappointing September jobs report.

The Bureau for Labor Statistics said 194,000 new jobs were created last month, with headline unemployment rate falling to a post-pandemic low of 4.8%. The September tally was firmly south of the Street consensus forecast of 500,000 and the weakest monthly total for the year.

Wages did rise 0.6% on the month, however, and private sector job gains were solid, at 317,000, triggering a mixed reaction for stocks heading into the final session of a volatile week.

“Friday’s mixed jobs number suggests little shift in the economic growth narrative,” Richard Saperstein, chief investment officer at Treasury Partners. “While the headline number was much weaker-than-expected, the economy saw decent job growth in the private sector during September as well as a decline in the unemployment rate.”

“Despite the relatively soft jobs report, the Federal Reserve remains on course to begin tapering its stimulus in November or December,” he added. “One weaker-than-expected jobs number is not likely to change the Fed’s thinking.”

Fed Chairman Jerome Powell told reporters last month that it wouldn’t take a knockout or super-strong employment report,” to begin slowing the pace of purchases, which analysts suggest could last for around 8 months before the entire program is exhausted. From there, the first rate hike is likely to come in September of 2022.

The Dow Jones Industrial Average was marked 15 points higher in late morning trading at 34,767 points, while the broader S&P 500 bumped 1 points into the red.

The tech-focused Nasdaq Composite, meanwhile, fell 46 points as benchmark 10-year note yields held at 1.61% in early New York trading following the jobs data release, the highest since early June.

A Senate deal that allowed for a temporary $480 billion addition to the debt ceiling, taking it to $28.9 trillion, will move to the House for a floor vote next week and push the entire debate into early December.

The agreement — which passed the upper chamber by a vote of 50-48 — triggered the largest single-day rally in global stocks since May and put Wall Street firmly into the green at the close of trading.

Energy markets, however, continue to test market bulls as oil approaches the highest levels in seven years again Friday amid the rolling power crunch — and natural gas prices surges — in Europe and China.