Weekly Recap: Stocks Rise As Fed Rate Hike Bets Fade, Bonds Keep Selling Off

TLDR

• The S&P 500 and Nasdaq closed higher Friday after a weak September jobs report lowered the odds of a Fed rate hike this month.
• Nonfarm payrolls grew by just 29,000 in September, the slowest pace this year, while the unemployment rate rose to 4.2%.
• Treasury yields kept climbing, with the 10-year and 30-year hitting multi-decade highs despite the weak jobs data.
• Nike shares dropped 3.6% after a weak earnings report and soft guidance, while Tesla rose 4.7% on strong delivery numbers.
• Oil prices fell for the week as G7 nations agreed to release emergency crude reserves to calm energy markets.

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Wall Street closed higher on Friday to end a mixed week for stocks. The S&P 500 gained 0.8% while the Nasdaq Composite jumped 1.2%, touching a new intraday record.

The Dow Jones Industrial Average rose 0.5% on the day. But for the full week, only the Nasdaq finished in positive territory.

What The Jobs Report Showed

The move came after a weaker than expected September jobs report. The U.S. Bureau of Labor Statistics said nonfarm payrolls rose by just 29,000 last month.

BREAKING: The US economy adds +29,000 jobs in September, well below expectations of +89,000.

The unemployment rate rose to 4.2%, above expectations of 4.1%.

August’s job number was also revised down by -29,000 jobs.

This marks the third weakest jobs report of 2026.

— The Kobeissi Letter (@KobeissiLetter) October 2, 2026

That was far below the 89,000 jobs economists had expected. It was also the slowest month of hiring this year.

Job growth for July and August was also revised down by a combined 60,000 positions. The unemployment rate rose to 4.2% from 4.1% in August.

Wage growth also slowed. Average hourly earnings rose just 0.1% for the month and 3% over the past year, the weakest annual pace since May 2021.

Investors read the report as a sign the Federal Reserve has room to leave interest rates alone at its meeting later this month. According to the CME FedWatch tool, the odds of a rate hike later in October fell to about 23%.

Still, some Fed officials have said more rate increases may be needed to bring down inflation. Dallas Fed President Lorie Logan said rates may need to rise by at least half a point.

Bond Yields Keep Climbing

Even as rate hike odds fell, the bond market told a different story. Longer-term Treasury yields kept rising through the week.

The 10-year yield touched its highest level since 2002. The 30-year yield hit a level not seen since May 2002.

Analysts pointed to a mix of factors behind the move. These include rising government debt, heavy borrowing by companies to fund AI infrastructure projects, and lingering concerns about inflation.

Oil prices moved in the opposite direction. Brent crude fell 4.4% for the week and U.S. crude dropped 3.2%.

The decline came after G7 nations agreed to release up to 100 million barrels from emergency reserves. The goal is to help stabilize global energy prices.

Company Movers: Nike And Tesla

Nike shares fell 3.6% after the company reported a quarterly revenue miss. It also gave weak guidance for the year ahead.

The company said it plans further job cuts and a reorganization of its global business. Nike has struggled with competition and weak sales in China.

Tesla moved in the other direction, rising 4.7%. The company delivered 486,532 vehicles in the third quarter, above analyst estimates of about 462,000.

Looking ahead, investors are watching for the next round of inflation data. The consumer price index and producer price index reports are due October 14 and 15.

The Federal Reserve’s next rate decision is scheduled for October 28.