Stocks end lower after September payrolls miss, but S&P 500 still logs weekly gain

Stocks closed in the red on Friday as investors digested a key report on the labor market’s recovery, which showed a much weaker-than-expected pace of hiring last month. 

The S&P 500 fluctuated between gains and losses throughout the day, trading choppily after three consecutive sessions of advances. The blue-chip index still eked out a weekly gain, however. 

The moves to the upside earlier this week came after Senate leaders said they reached an agreement on raising the government borrowing limit into early December, helping avert a default as soon as this month. The chamber voted Thursday evening to raise the debt limit by $480 billion, and the legislation for the short-term increase now heads to the House of Representatives. 

With concerns over the government debt ceiling pushed off, investors have fixed their attention toward the latest monthly jobs report from the Labor Department. This report showed another miss on payroll gains after a disappointing August print. 

Non-farm payrolls rose by only 194,000 in September versus the 500,000 expected. The unemployment rate fell more than expected to 4.8{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, though this positive development came alongside a disappointing drop in the labor force participation rate to 61.6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, versus 61.7{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} in August. And the size of the civilian labor force actually contracted in September, with the gap between the size of the labor force in February 2020 and last month yawning further to top 3 million. 

Average hourly earnings also accelerated to reach a 4.6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} year-over-year rate, or the fastest since February, in another print affirming inflationary pressures taking place across the U.S. economy.

“People are more fixated on the jobs created more than anything else. I think the wages are more important for people who are worried about inflation,” Julie Biel, portfolio manager at Kayne Anderson Rudnick, told Yahoo Finance Live on Thursday. “For us, seeing modest wage inflation is a positive because if you think about the U.S. economy, it’s primarily a consumer economy … so it is a positive for the economy longer-term. But it is a negative for profit margins which have been at all-time highs.”

Friday’s jobs report stood in stark contrast to other, stronger-than-expected data on the state of the labor market in the U.S. New weekly jobless claims came in at their second-lowest since March 2020 on Thursday, and ADP’s private payrolls report showed a better-than-expected 568,000 job gains in September earlier this week.

Despite the payrolls miss, the September jobs report may have still been enough to trigger the start of tapering by the Federal Reserve, some economists said. Others, however, said the significant headline payrolls miss may give the central bank pause.

“I think people were counting on [a tapering announcement] being November, and I think now that there’s a percentage chance that it won’t be in November now as a result of this data,” Constance Hunter, KPMG chief economist, told Yahoo Finance Live Friday morning. 

The central bank already signaled last month that it was inclined to remove some of its highly accommodative monetary policies as the recovery made further headway. And Fed Chair Jerome Powell said it would only take a “reasonably good report” for September employment to signal the labor market had reached the Fed’s threshold for tapering.

“There is no other plausible explanation why employers are unable to hire the workers they need: the reason is there is no one out there to hire and the economy is closer to full employment than Washington officials think,” Chris Rupkey, chief economist at FWD Bonds, said in an email Friday morning. “The economy is hot and needs to be cooled down. Don’t be fooled by today’s payroll jobs forecast miss, Fed tapering remains on track for announcement at the upcoming November meeting.” 

4:02 p.m. ET: Stocks end mixed as investors mull September jobs report. 

Here’s where markets ended Friday’s session:

  • S&P 500 (^GSPC): -8.34 points (-0.19{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 4,391.42

  • Dow (^DJI): -8.23 points (-0.02{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 34,746.71 

  • Nasdaq (^IXIC): -74.48 points (-0.51{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 14,579.54

12:41 p.m. ET: OECD reaches global agreement on corporate tax rate

The Organisation for Economic Cooperation and Development said Friday that it reached a deal among 136 countries to ensure major companies pay a minimum corporate tax rate of 15{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}. 

“The landmark deal, agreed by 136 countries and jurisdictions representing more than 90{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} of global GDP, will also reallocate more than USD 125 billion of profits from around 100 of the world’s largest and most profitable MNEs to countries worldwide, ensuring that these firms pay a fair share of tax wherever they operate and generate profits,” the OECD said in a statement on Friday. 

10:15 a.m. ET: U.S. crude oil reaches $80 per barrel for the first time in seven years

U.S. West Texas intermediate crude oil futures rose to reach $80 per barrel for the first time since November 2014, extending a one-month and year-to-date rally in energy and commodity prices.

Domestic crude oil prices have risen in six of the last seven sessions, and posted a strong bounce over the past several weeks. West Texas intermediate futures are up nearly 65{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} for the year-to-date and more than 15{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} over the past month alone, stoking concerns over rising inflation across various pockets of the economy. 

10:10 a.m. ET: What economists are saying about the September jobs report

Many economists described the September jobs report as “mixed,” with the notable miss on the headlines payrolls figure pulling attention away from less negative aspects of the report like drop in jobless rate and pick-up in service-sector hiring. 

Here’s what a number of economists had to say about the report, based on emails and notes sent to Yahoo Finance:

  • “Looking behind curtains the details point to tighter labor conditions than the headline data suggests. With wages increasing to 4.6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} on an annualized basis and the unemployment rate dropping to 4.6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} it appears that labor conditions are fairly tight given the current amount of job openings in the economy.” – Charlie Ripley, senior investment strategist for Allianz Investment Management

  • “This is a very mixed bag … The details show a modest 74K uptick in leisure and hospitality employment after August’s sharp slowdown to just 38K; the sector averaged 403K in June and July, so this hit accounts for most of the softening in overall private job growth. October will be much better, given the continued decline in Delta cases and rising activity in the restaurant, airline, and hotel sectors.” – Ian Shepherdson, chief economist for Pantheon Macroeconomics

  • “The Fed began their extraordinary stimulus measures over a year and a half ago and they are anxious to begin removing that stimulus, which is why it would have taken an extremely bad jobs report in order to derail that. This report was disappointing, without a doubt, but we don’t believe it is bad enough to stop them.” – Chris Zaccarelli, chief investment officer for Independent Advisor Alliance

9:30 a.m. ET: Stocks mixed after jobs report miss

The three major indexes struggled for direction Friday morning as investors digested the September jobs report, which showed another disappointing print on payroll gains. 

The S&P 500, Dow and Nasdaq were each little changed after the report. Treasury yields rose across the curve, with the 10-year yield adding 2 basis points to near 1.6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}. The small-cap Russell 2000 outperformed, adding more than 1.5{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}. 

Commodity prices extended gains, with U.S. crude oil futures gaining another 1.4{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} to close in on $80 per barrel. Gold and silver prices each jumped. 

7:12 a.m. ET Friday: Stock futures drift higher ahead of jobs report 

Here’s where markets were trading ahead of the opening bell:

  • S&P 500 futures (ES=F): +2.75 points (+0.06{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}), to 4,392.75

  • Dow futures (YM=F): +23 points (+0.07{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}), to 34,661.00

  • Nasdaq futures (NQ=F): +4.25 points (+0.03{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 14,885.50

  • Crude (CL=F): +$0.56 (+0.72{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $78.85 a barrel

  • Gold (GC=F): +$2.00 (+0.11{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $1,761.20 per ounce

  • 10-year Treasury (^TNX): +1.5 bps to yield 1.586{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}

6:07 p.m. ET Thursday: Stock futures extend earlier gains

Here’s where markets were trading Thursday evening:

  • S&P 500 futures (ES=F): +3.25 points (+0.07{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}), to 4,393.25

  • Dow futures (YM=F): +23 points (+0.07{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}), to 34,661.00

  • Nasdaq futures (NQ=F): +17.50 points (+0.12{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 14,898.75

NEW YORK, NEW YORK - SEPTEMBER 30: Traders work on the floor of the New York Stock Exchange (NYSE) on September 30, 2021 in New York City. In afternoon trading the Dow was down over 250 points as investors continue to worry about inflation, wages and supply chain issues. (Photo by Spencer Platt/Getty Images)

NEW YORK, NEW YORK – SEPTEMBER 30: Traders work on the floor of the New York Stock Exchange (NYSE) on September 30, 2021 in New York City. In afternoon trading the Dow was down over 250 points as investors continue to worry about inflation, wages and supply chain issues. (Photo by Spencer Platt/Getty Images)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter

Christopher Lewis

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