U.S. stocks climbed Friday after a weaker-than-expected July jobs report led traders to pull back their bets on a Federal Reserve interest rate increase next month.
The S&P 500 advanced 0.3%, the Nasdaq Composite climbed 0.9%, and the Dow Jones Industrial Average finished up 67 points, or 0.1%
The economy shed 23,000 jobs in July, well short of the 83,000 gain economists polled by Dow Jones had forecast. Revisions to May and June payrolls showed 103,000 fewer jobs were added in those months than previously reported, according to The Wall Street Journal. The unemployment rate ticked down to 4.1% from 4.2%, while the labor force participation rate slid to a more-than-five-year low.
The report shifted how traders are pricing Fed policy. Fed funds futures pricing now shows most traders anticipating no change to the benchmark rate of 3.50% to 3.75% when policymakers gather in September, CME FedWatch data show. That is a sharp turnaround from Thursday, when futures markets had assigned a 55% probability to a quarter-point rate increase. “For the job market this is a number that’s not booming and may actually be breaking, but for the markets the two biggest areas of concern were yields and inflation,” Nuveen Chief Investment Officer Saira Malik said on CNBC’s “Squawk Box.” “This lower number helps not reinforce the Fed’s narrative that they need to raise interest rates.” Treasury yields also fell after the report, with the 10-year U.S.