The economy added just 29,000 jobs in September, compared with roughly 90,000 expected, while the unemployment rate rose to 4.2% from 4.1%. August payroll growth was also revised down to 133,000 from the previously reported 162,000.
Markets treated the weak report as good news for risk assets. The S&P 500 rose about 0.9%, while the Nasdaq gained roughly 1.5%, putting the tech-heavy index near another record.
Fed Hike Odds Collapse After Jobs Miss
The biggest market reaction came from rates.
Fed funds futures moved to price less than a 20% chance of an October rate hike, down sharply from above 25% immediately before the report and much higher levels earlier in the week. December tightening remains possible, but the September data substantially strengthened the case for a pause.
Treasury yields fell in response. The 10-year yield dropped toward 5.18%, while the two-year yield slipped to roughly 4.72%.
That reverses some of the pressure that recently hit equities when the 10-year Treasury yield pushed above 5%.
Nasdaq Benefits Most From Falling Yields
Technology stocks were among the biggest beneficiaries because lower Treasury yields reduce the discount rate applied to future earnings.
The Nasdaq moved toward a new record close around 27,309, above its previous record of 27,244.28, with Nvidia also approaching its first record close since May.
That dynamic mirrors the recent S&P 500 and Nasdaq rally after softer PCE inflation, when falling yields similarly boosted growth stocks.
