Wall Street’s main indexes climbed on Friday after an uptick in the US unemployment rate in October overshadowed data showing strong jobs growth and supported hopes that the Federal Reserve could deliver smaller rate hikes in the future.
The Dow Jones Industrial Average was up 454 points, or 1.4%, at 32,456, the S&P 500 was up 1.4% and the Nasdaq was up 1.1%.
The Labor Department’s closely watched non-farm payrolls report showed a rise in the unemployment rate to 3.7% last month from 3.5% in September, suggesting some loosening in labor market conditions that could give the Fed cover to shift towards smaller rate increases next month.
It also showed average hourly earnings rose 0.4% in October against a forecast of 0.3%, while nonfarm payrolls increased by 261,000 jobs against expectations of 200,000 after rising 263,000 in September.
The report was a key focus area for markets after hawkish comments from Fed Chair Jerome Powell on Wednesday spurred fears that the central bank could keep raising borrowing costs for longer than previously expected.
“Powell should also be pleased that the unemployment rate went up from 3.6% to 3.7%. All members of the Fed want and are expecting unemployment to rise at least a full percentage point,” said Bryce Doty, senior portfolio manager at Sit Fixed Income Advisors.
The reading comes on the heels of a conflicting set of data which, while pointing to a slowdown in certain pockets of the economy, has also highlighted resilience in labor demand in the United States despite the Fed’s aggressive policy moves to control inflation.
“This one’s a step in the right direction because it’s the third month in a row of more modest hourly earnings gains,” said Jason Pride, chief investment officer for private wealth at Glenmede in Philadelphia.
Traders’ bets of a 75 basis point rate hike in December briefly rose to 64.5% after the release of the data but swiftly slipped back to around 60%.
Market focus will now turn to a key inflation reading due next week as well as midterm elections on Tuesday where control of Congress is at stake.
[Written in collaboration with other media outlets with information from the following sources]
