The Dow posted a record closing high on Friday and the Nasdaq ended with a more than 1% gain as a stronger-than-expected jobs report reassured investors who had worried the economy may be getting too weak.
The blue-chip Dow jumped 341.16 points, or 0.8%, to 42,352.75, eclipsing its previous high of 42,330.15 on Monday.
The S&P 500 gained 0.9% and the Nasdaq gained more than 200 points, or 1.2%. All three indexes finished with weekly gains for the fourth straight week.
US job gains increased in September by the most in six months, and the unemployment rate fell to 4.1%, the report showed.
Traders further reduced bets on a 50-basis-point reduction at the Federal Reserve’s Nov. 6-7 meeting. Traders are now pricing in just an 8% chance of a 50-bps rate cut, down from around 31% earlier on Friday, the CME Group’s FedWatch Tool showed.
The data “basically tells us economic activity in the fourth quarter is likely to remain at a solid pace,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“It’s a good surprise, but I also think it may now slow the pace of rate cuts.”
The Fed kicked off a monetary easing cycle last month by cutting rates 50 bps.
Small caps were outperforming, with the Russell 2000 index up 1.4%, and the S&P 500 financials index also was up 1.6%.
The S&P energy index was up more than 1% for the day, following oil prices higher.
With tensions in the Middle East escalating, the index was up 7%, its biggest weekly percentage gain since October 2022.
President Biden said that if he were in Israel’s shoes, he would think about alternatives to striking Iranian oil fields, adding he thinks Israel has not yet concluded how to respond to Iran’s missile barrage this week.
Among stocks, Spirit Airlines dropped 25% after a report showed the carrier was in talks with bondholders about a potential bankruptcy filing. Frontier Group shot up 16%, while United Airlines rose 6.5% and Delta Air Lines climbed 3.8%.
Rivian shares fell 3.1% after the electric vehicle startup cut its full-year production forecast and delivered fewer vehicles than expected in the third quarter.
Third-quarter earnings for S&P 500 companies are expected to unofficially begin next week. Major financial firms highlight next week’s reports, with JPMorgan Chase, Wells Fargo and BlackRock due on Oct. 11.
Bullish investors are hoping results will justify increasingly rich valuations in the stock market. The S&P 500 is up 21% for the year so far.
US ports on the East and Gulf coasts reopened, but clearing the cargo backlog will likely take time.
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