US stocks rally, bonds sink on strong jobs report

The S&P 500 finished Friday up 0.9% on a blockbuster jobs report, delivering a weekly gain of 0.2%. The tech-heavy Nasdaq 100 added 1.2%. The Russell 2000, which tracks small caps, rose 1.5% but finished the week down 0.5%. 

254,000 jobs were added in September — the most in six months. Bond yields rose sharply on the news. The policy-sensitive two-year Treasury yields gained 22 basis points to hit 3.92%, while the 10-year yields were up 13 basis points. The US dollar was stronger and gained more than 2% this week, its best weekly performance in two years.

Traders trimmed bets on a 50-basis-point cut at the Federal Reserve’s November meeting, a smaller reduction a near lock, according to CME FedWatch. 

Most sectors were up, but housing-related stocks were a notable exception. The real estate sector ETF was down 0.7%, and companies like Extra Space Storage, credit agency Equifax and homebuilder D.R. Horton were among the worst S&P 500 performers of the day. This was a result of fewer expected rate cuts on the strong jobs report, which might lead to higher mortgage rates. Utilities was the only other sector that retreated. 

Conversely, the financial sector was the best performer, up 1.7%. 

Oil settled higher on Friday. Futures of both WTI crude and Brent crude were up more than 9% this week, as tensions in the Middle East continued to play out. Gold futures slid.