The bond market dominated this week’s trading, with the 10-year Treasury yield reaching 5.34% on Thursday, the highest since April 2002, before settling at approximately 5.28% by Friday. The 30-year yield approached 5.67%. Despite the volatility in bond yields, stocks fared surprisingly well. The S&P 500 fell by 0.3% to end at 7,722.72, while the Nasdaq-100 gained 0.7%, buoyed by Nvidia’s valuation surpassing $5.7 trillion. The Dow Jones faced challenges, particularly with rate-sensitive sectors like banks experiencing notable declines.
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Recent data highlighted challenges for the economy. The ISM manufacturing index remained stable at 54.5, but its prices component surged by 6.8 points to 77.9, marking the highest level since the Iran War. Despite efforts from the G7 to release strategic oil reserves, Brent crude closed near $103 per barrel, impacted by U.S. military deployments to the Middle East.
On Friday, a disappointing jobs report showed only 29,000 jobs added in September compared to an expectation of about 85,000, while revisions to previous months’ data removed an additional 60,000 jobs. The unemployment rate rose to 4.2%, and wage growth slowed to 3.0%, leading traders to reduce the likelihood of an October rate hike to around 18%. This news prompted a small rally in the S&P 500, which gained 0.7% on Friday, as market participants anticipated a pause in Fed tightening despite rising inflation pressures.
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