The September US employment report gave stock buyers something to cheer about on Friday, but the bond market told a more complicated story. Payroll growth missed expectations, earlier months were revised lower and wage growth slowed. The initial reaction sent Treasury yields lower, weakened the dollar and lifted stocks as traders reduced expectations for another Federal Reserve rate hike in October.

That bond-market move did not hold. Yields reversed higher and finished above Thursday's levels. Stocks were more successful in keeping their gains, with the Nasdaq 100 closing at a new record. Nvidia and the Nasdaq Composite both reached new all-time intraday highs, but neither finished at a record closing level.

Dollar Finishes Mostly Lower

The US dollar ended lower against most major currencies despite the recovery in Treasury yields. The Australian dollar led the gains against the greenback, followed by the British pound and the Swiss franc. The Canadian dollar was the exception: USDCAD finished higher as lower oil prices provided a less supportive backdrop for the loonie.

The late-session levels showed:

• EURUSD: 1.1257, USD -0.14%
• USDJPY: 157.82, USD -0.16%
• GBPUSD: 1.3244, USD -0.34%
• USDCHF: 0.8283, USD -0.29%
• USDCAD: 1.4251, USD +0.23%
• AUDUSD: 0.6958, USD -0.42%
• NZDUSD: 0.5615, USD -0.21%

USDJPY illustrated the changing tone. The pair fell to 156.97 the session but recovered toward 157.82 as yields moved back higher. Dollar sellers had their opportunity after the data, but they could not hold the full decline.

Treasury Yields Reverse the Post-Jobs Decline

The softer employment report initially supported Treasury buying, but that demand faded, leaving yields higher across the curve:

• 2-year yield: 4.8414%, +5.44 basis points
• 5-year yield: 5.0733%, +6.83 basis points
• 10-year yield: 5.2939%, +5.99 basis points
• 30-year yield: 5.6448%, +4.18 basis points

The 10-year yield was back near 5.30% after trading toward 5.17% immediately following the report.

That is an important distinction for traders. The employment data reduced the immediate pressure for further tightening, but the price action showed it was not enough to sustain a bond rally. Inflation and the broader interest-rate outlook remain concerns.

US Stocks Close Higher; Nasdaq 100 Sets a Record

All of the major US indices finished higher, with the Nasdaq Composite leading the percentage gains:

• Dow Industrial Average: 51,182.11, +250.00 points or +0.49%
• S&P 500: 7,722.85, +56.39 points or +0.74%
• Nasdaq Composite: 27,190.86, +319.27 points or +1.19%
• Russell 2000: 2,832.90, +26.27 points or +0.94%
• Nasdaq 100: 30,807.93, +306.37 points or +1.00%, a new record close

The Nasdaq Composite reached a new intraday high but finished below its previous record closing level near 27,244. The Nasdaq 100 held enough of its advance to secure a new all-time closing high.

Technology Leads, but Some Record Attempts Fall Short

Technology was a clear source of strength, with both Nasdaq indices outperforming the Dow and the S&P 500. Nvidia also traded to a new all-time intraday high, although it pulled back and finished below its previous record close.

The softer jobs and wage numbers helped ease concerns about additional Fed restraint. Even so, the recovery in yields created a less favorable backdrop later in the session. Small caps participated as well, with the Russell 2000 gaining 0.94%, showing that the buying extended beyond the largest technology names even as some record attempts fell short at the close.

European Stocks Rebound on Friday but Finish Lower for the Week

European equities closed higher on Friday, but the gains did not erase the weekly losses:

• German DAX: 25,222.05, +282.69 points or +1.13%; for the week, -0.73%
• France CAC: 7,897.20, +61.88 points or +0.79%; for the week, -2.24%
• UK FTSE 100: 10,461.94, +33.68 points or +0.32%; for the week, -2.18%
• Spain IBEX: 19,085.31, +80.01 points or +0.42%; for the week, -3.12%
• Italy FTSE MIB: 50,483.22, +245.36 points or +0.49%; for the week, -2.67%

European benchmark 10-year yields declined across the board on Friday. The weekly picture was more mixed: Germany's yield fell 14.6 basis points, the UK's fell 6.8 basis points and Spain's declined 1.2 basis points. French and Italian yields rose 2.7 and 2.2 basis points respectively, widening their spreads versus Germany — a differential often watched as a gauge of how borrowing costs diverge within the euro area.

Employment Growth Slows; Wages Also Disappoint

The September jobs report was soft across several key measures:

• Nonfarm payrolls: +29,000 versus +90,000 expected
• August payrolls: revised to +133,000 from +162,000
• Combined revisions to July and August: -60,000
• Unemployment rate: 4.2% versus 4.1% expected and previously
• Average hourly earnings: +0.1% for the month versus +0.3% expected
• Annual wage growth: 3.0% versus 3.2% expected
• Private payrolls: +46,000
• Government payrolls: -17,000

Hiring was concentrated. Private education and health services added 20,000 jobs, construction added 11,000 and manufacturing added 9,000. Information, financial activities, and professional and business services all lost jobs.

Over July to September, payroll growth averaged approximately 51,000 per month. Education and health services, construction and manufacturing together added more jobs than the overall payroll increase, with weakness elsewhere pulling down the total.

There were some offsets. Household employment rose 406,000, while the labor force expanded by 485,000. Participation increased to 61.8%, helping explain the rise in unemployment. Average weekly hours held at 34.4, offering little evidence of aggressive cuts to working hours.

The immediate market reaction pushed market-implied odds of an October rate hike toward 15%-16%. Those were post-release readings, however, and the later rebound in yields showed that the broader rate debate remained open.

Goolsbee Keeps the Focus on Inflation

Chicago Fed President Austan Goolsbee described the labor market as steady and said inflation was the more pressing part of the Fed's mandate. He left both a hike and a pause on the table while looking for evidence that inflation is moving toward 2%.

For traders, the message is that one softer employment report does not settle the policy outlook. Slower wage growth is encouraging, but policymakers still want progress on inflation.

Oil Recovers After Stockpile Headlines Push Prices Lower

Oil fell sharply earlier in the session after announcements of European crude and diesel stockpile releases. French President Emmanuel Macron outlined releases over four months, with G7 leaders confirming up to 100 million barrels. President Trump also said European diesel releases would begin immediately.

Sellers, however, could not sustain the move below the $88.72 floor. The price recovered much of its earlier decline, with the late-session WTI futures snapshot showing $91.41, down $1.46 or 1.57%.

Additional supply can ease near-term price pressure, but rebound showed that sellers could not maintain control at the lows. Middle East developments and the broader supply outlook remain important for both energy prices and inflation expectations.

Gold and Silver Decline Despite the Weaker Dollar

Precious metals failed to benefit sufficiently from the broadly weaker dollar:

• Spot gold: $4,142.55, -$34.84 or -0.83%
• Silver: $60.509, -$0.4395 or -0.72%

The recovery in Treasury yields was a headwind for gold. Higher yields increase the opportunity cost of holding a metal that pays no interest, which helps explain why gold struggled despite the dollar's decline. Silver also moved lower, while copper gained 0.69%, highlighting the different influences across the metals.

Bitcoin Does Not Follow Stocks Higher

Bitcoin traded near $84,166, down $687 or 0.81%, near the end of the day. The gains in equities and the weaker dollar did not translate into sustained buying in Bitcoin. The late rise in yields provided a less supportive backdrop, but Friday's main observation was straightforward: stock-market strength did not carry through to crypto.

Next Week's Calendar

Next week features US ISM services data on Monday, Fed minutes on Wednesday, ECB meeting accounts on Thursday, and Canadian employment and University of Michigan sentiment on Friday. The Fed minutes will be watched for how officials weighed the same labor-versus-inflation tradeoff that produced Friday's reversal in yields. Inflation expectations in the Michigan survey will deserve attention.

Stock buyers head into the weekend with gains and a Nasdaq 100 record close. Elevated Treasury yields, the retreat from Nvidia's and the Nasdaq Composite's intraday records, and oil's recovery from its lows leave some unfinished business. The first move after the news gives traders information; whether that move can hold tells them more. Friday's bond market was a good reminder of that.