Stock Market Today: Nasdaq Hits Record on Jobs Miss

Wall Street rallied Friday as September payrolls rose just 29,000, cutting Fed rate-hike odds and lifting the S&P 500 0.9% and the Nasdaq to a record high.

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U.S. equities rose broadly on Friday, October 2, after the Labor Department reported that employers added 29,000 jobs in September, well short of the roughly 84,000 expected. The unemployment rate rose to 4.2%. The data removed much of the pressure on the Federal Reserve to raise interest rates at its October 27-28 meeting. The stock market today was led by technology, and the Nasdaq Composite gained about 1.5% to a record.

What Happened in the Stock Market Today?

Stocks rose across the board on the jobs miss, with growth and technology shares leading. The S&P 500 gained about 0.9%, the Dow Jones Industrial Average about 0.5% and the Nasdaq about 1.5%. The gap between the Dow and the Nasdaq reflects the weight of large technology names in the tech-heavy index. Small caps also advanced, with the Russell 2000 up about 1%.

The VIX volatility gauge fell about 4.6% to near 15.6, a sign of subdued hedging demand. Crude oil dropped about 3% to roughly $90 a barrel.

Why Did a Weak Jobs Report Lift Stocks?

A weak jobs report lifted stocks because the Fed has been weighing rate increases, not cuts. With inflation still a bigger concern for policymakers than the labor market, strong employment data had recently been treated as bad news for equities. A hot August report in early September pushed yields higher and stocks lower.

September reversed that pattern. A softer labor market reduces the case for tightening, and traders cut the probability of a quarter-point hike at the October meeting from about 64% to roughly 17%. The implied probability that the Fed holds rates steady rose to about 83%.

The report did not signal a collapse in hiring. Payroll growth of 29,000 is weak, but the unemployment rate at 4.2% remains low by historical standards. The market treated the report as evidence of cooling rather than contraction, a mix that supports risk assets without raising recession alarms.

What Does the Jobs Miss Mean for Interest Rates?

The jobs miss reduces near-term pressure for higher interest rates, but it does not remove the risk of further tightening. The 10-year Treasury yield eased about 2 basis points to roughly 5.21% after the release, then recovered part of its decline. The 30-year yield stayed near 5.6%. Yields at these levels keep borrowing costs elevated for mortgages, corporate debt and equity valuations.

The Fed's decision will depend on the data that arrives before the meeting, including the next inflation readings. A single soft payroll print gives policymakers room to hold, but it does not settle the inflation question that drove the hawkish turn.

Market Context

Rate expectations have been the main driver of daily moves in recent weeks. A strong payroll report on September 4 lifted the two-year yield to its highest since January 2025 and pushed stocks lower. The September data swung sentiment the other way. The move shows how closely equity markets are tied to the policy path, and how sensitive large-cap growth names are to the 10-year yield.

The Nasdaq's record shows that investors are still paying for earnings growth tied to artificial intelligence spending, even with long-term yields above 5%. Semiconductor and platform companies have supplied much of the index's gains this year.

What Comes Next for the Fed and Equities?

The next test for the market is the data between now and the Fed's October 27-28 meeting. A softer inflation reading would reinforce the hold scenario and support the Nasdaq's record run. A hotter reading would revive hike expectations and put pressure on yields and valuations, as it did in early September.

Third-quarter earnings season begins in mid-October. Results from large technology companies will show whether profit growth can justify valuations at record levels. Oil near $90 remains a variable for inflation expectations, and a continued decline would ease one source of price pressure.

Outlook

Friday's rally rested on a single idea: a weaker labor market lowers the odds of another rate increase. The Nasdaq closed the week at a record, led by Nvidia and Tesla, while the S&P 500 and Dow also advanced. The path from here runs through inflation data, the Fed's October decision and the start of earnings season.