Cooler jobs data knocks down rate-hike odds, sending US stocks back toward record highs

September’s US payrolls report came in weaker than economists had expected, with nonfarm job growth slowing and wage gains showing little sign of re-acceleration. That was enough to cool expectations that the Federal Reserve will deliver another rate hike at its October meeting, and Wall Street rallied in response. All three major US stock benchmarks advanced, with the tech‑heavy Nasdaq jumping more than 300 points at one stage, while the S&P 500 and Dow industrials pushed back toward record territory.

Benchmark 10‑year Treasury yields, which had recently pushed above 5%, edged lower after the data, easing pressure on risk assets such as equities. At the same time, oil prices retreated as investors reassessed the outlook for supply from major producers, taking some heat out of inflation concerns and reinforcing the move into stocks.

Still, many investors caution that one soft jobs report does not settle the inflation debate. Market pricing suggests the probability of a final rate increase at the Fed’s December meeting remains elevated, and the central bank continues to signal its focus on bringing inflation back to target. Over the coming weeks, incoming economic data and third‑quarter earnings will be crucial in determining whether the US economy is heading for a gentle slowdown and “soft landing,” or risks re‑accelerating. For now, equity markets look set to remain highly sensitive to each new data release and policy hint.