Stock Market Today: S&P, Nasdaq Head for Record Highs After Strong

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Stocks were rising on Friday after the U.S. added more jobs than expected in October, but the result wasn’t strong enough to spark fears that the Federal Reserve will hike interest rates hastily.

In afternoon trading, the

Dow Jones Industrial Average
rose 110 points, or 0.3%, after the index slipped 33 points Thursday to close at 36,124. The

S&P 500
rose 0.2% and the

Nasdaq Composite
was flat. Both the S&P 500 and Nasdaq hit new highs Thursday. The indexes’ gains accelerated after the jobs report was released, then moderated in the afternoon.

The U.S. added 531,000 jobs in October, above estimates for 450,000 and above September’s revised result of 312,000. The unemployment rate fell to 4.6%. Job gains were particularly strong in the one of the most Covid-19-sensitive areas: leisure and hospitality. That sector added 164,000 jobs. 

The jobs result “really is a goldilocks number,” said Marvin Loh, senior global macro strategist for State Street. “The job market is recovering. The Fed’s going to wait [to raise interest rates].”

Economists were indeed expecting that, as pandemic-related jobless benefits expire, people will be incentivized to go back to work. Investors want to see that people are getting back to work—enabling sustainably strong consumer spending—but that the job market won’t heat up too quickly. If it does, the Fed could be compelled to reduce its bond buying program faster or hike short-term interest rates sooner rather than later. 

For now, markets aren’t concerned that the potential inflation spurred by more people in the workforce will make the Fed more aggressive on rate hikes. The 2-year Treasury yield fell to 0.4%, below its level just before the jobs report.

In afternoon trading, however, the 10-year Treasury yield declined to 1.46% from a daily high of 1.54%. The bond’s prices rises as the yield falls. That indicates some might be concerned about longer-term economic growth and low inflation.

In reality, the move down in the yield might be a function of market technicals, rather than anything scary on the economic front. There are probably “people that are squeezing the shorts,” said Dennis Debusschere, founder of 22 Research.

In any event, the falling yield may be spooking other market participants. “There’s clearly some risk that 10y yields are sniffing out a problem,” Debusschere said, referring to a…