NEW YORK: Some relief is returning to the rattled U.S. bond market on Friday after the latest jobs report cooled worries that a potentially hot U.S economy could make inflation much worse. That's helping U.S. stocks climb near their all-time high.
The S&P 500 rose 0.9% and pulled within 0.8% of its record set in August. The Dow Jones Industrial Average was up 281 points, or 0.6%, as of 11 a.m. Eastern time, and the Nasdaq composite was 1.5% higher.
All of Wall Street got a jolt after the U.S. government said employers across the country added 29,000 jobs to their payrolls last month. That was fewer than economists expected and a slowdown from August's hiring rate of 133,000.
More importantly for financial markets, it tamped down concerns that the U.S. economy could be so strong that it gives inflation fuel to drive even higher. Inflation has remained much worse than anyone would like, and the Federal Reserve recently raised its main interest rate for the first time in three years to try to rein in the painful increases for the cost of living.
Even though Americans are feeling more frustrated about inflation and their finances, the overall U.S. economy has been chugging along. Earlier this week, the U.S. government said the economy's growth in the spring was stronger than earlier thought, driven by businesses building AI data centers and spending by consumers.
Friday's jobs report eased Wall Street's concerns about a potentially overheating economy driving inflation higher, at least for now. And it pushed traders to pull back on bets the Fed will hike its main interest rate later this month at its next meeting. They now see less than a 21% probability of that, down from 64% a week ago, according to data from CME Group.
"This report strengthens the case for the Federal Reserve to remain patient," according to Adam Schickling, senior economist at Vanguard. "The labor market has not deteriorated sharply, but there is also little evidence that it has meaningfully strengthened, giving policymakers reason to wait for additional data."
The pullback in expectations for an October rate hike helped yields ease for all kinds of Treasury yields.
The centerpiece of the U.S. bond market, the 10-year Treasury, saw its yield briefly drop below 5.17% before it pulled back to 5.24%. That's down from its peak near 5.35% on Thursday, when it and other longer-term yields neared their highest levels in two decades.
An easing of yields can help the economy by making it more affordable for everyone to borrow money. Higher yields, meanwhile, tend to undercut prices for stocks and other investments.
Of course, a solid U.S. economy and worries about inflation are only a couple of the many drivers that have caused yields to jump in bond markets worldwide.
Concerns about big spending by governments, along with the mountains of debt they're racking up, continue. In France, for example, yields have been particularly shaky as the government contends with its record debt and strained budget.
On Friday, a drop for oil prices helped take some pressure off bond markets worldwide. The price for a barrel of Brent crude fell 2% to $100.24. It's been swinging sharply on uncertainty about when the war with Iran will allow the global oil industry to return to normal.
Lower yields in the bond market help investors justify paying higher prices for stocks, even those that get criticized for being too expensive. That helped companies in the artificial-intelligence industry add to some of their already stellar gains.
Nvidia's 1.8% rise was the single strongest force lifting the S&P 500.
Tesla rallied 4.8% after the electric-vehicle company said it delivered 486,532 vehicles to customers during the latest quarter, more than analysts expected.
Such gains more than made up for a 5.9% drop for Nike. The sneaker and athletic apparel company reported a stronger profit for the latest quarter than analysts expected, but its revenue weakened by more than feared. Nike also gave a forecast for profit this fiscal year that fell short of analysts' expectations.
In stock markets abroad, indexes bounced back in Europe from sharp losses taken a day earlier after bond yields swung sharply across the continent.
Asian indexes were mixed, with Hong Kong's Hang Seng dropping 2.6% but South Korea's Kospi adding 0.5%.
