* Nike drops after warning on China demand weakness
* Russell 2000 registers biggest daily gain in a month
* Data storage providers slump after report Toshiba to
double hard disk production capacity
NEW YORK, Oct 2 (Reuters) – US stocks advanced on Friday
to close out the trading week after weaker-than-expected jobs
data dampened expectations for a rate hike from the Federal
Reserve at its policy meeting this month.
The Labor Department said nonfarm payrolls increased by
29,000 jobs last month, with the count for the prior two months
also revised sharply lower, and well below the 90,000 estimate
of economists polled by Reuters.
The weaker-than-anticipated data pulled down expectations
for a rate hike of at least 25 basis points from the Fed at its
meeting at the end of October to 22.7%, according to CME
FedWatch, from 24.4% in the prior session and 64.2% a week
earlier.
“Today’s news was OK insofar as it means the economy isn’t
roaring,” said Robert Bernstone, head of trading at SummitTX
Capital in New York. “But how good is that? Yes, it’s fine
insofar as it takes the short-term rate hike off, but there is a
concern over the economy, there is a concern over inflation, so
cautious optimism is kind of where people are.”
“But with that said, a potential squeeze into the end of the
year, or at least for the next month or two, could happen just
because it’s a hated rally.”
According to preliminary data, the S&P 500 gained
57.93 points, or 0.76%, to end at 7,724.38 points, while the
Nasdaq Composite gained 319.73 points, or 1.19%, to
27,191.33. The Dow Jones Industrial Average rose 260.15
points, or 0.51%, to 51,186.71.
SMALL-CAP STOCKS OUTPERFORM
Tempered expectations for an impending rate hike helped
boost rate-sensitive stocks such as the S&P 500 real estate
index, and the small-cap Russell 2000 index,
which gained about 1% and registered its biggest daily gain in a
month.
Megacap stocks helped lead the advance, with Nvidia
and Tesla among the biggest boosts to the S&P 500.
Tesla’s gains helped lift the S&P 500 consumer discretionary
index about 1% as the best-performing of the 11 major
S&P sectors.
A string of recent data showing resilient economic activity
and a slower-than-expected increase in prices, along with
comments from two top policymakers cautioning against another
rate increase, had already led investors to scale back
expectations this week for an October rate hike.
Despite Friday’s gains, both the Dow and S&P 500 recorded a
fourth weekly decline in the past five, but the Nasdaq secured a
weekly gain, its fifth in the last six.
Nike stumbled after the US sportswear company
forecast a surprise steep drop in annual revenue due to weakness
in China, announced job cuts and decided to shake up its global
business divisions.
Shares of data storage providers fell, with Western Digital
and Seagate Technology both tumbling as the
worst performers in the S&P 500 tech index. Nikkei
reported that Japanese technology group Toshiba plans to double
its production capacity for hard disk drives used in AI data
centers within fiscal 2027.
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