Wall Street posts best weekly finish in 2023 as jobs report tames rate rise concerns

Two more inflation reports and another jobs update before the next Fed meeting could indicate if the economy is moving in the right direction

A recruitment sign posted in a Target store in Sausalito, California. Nonfarm payrolls in the US rose by about 150,000 in October, the Bureau of Labour Statistics reported on Friday, slowing more thanShow more

Wall Street posted its best weekly finish in about a year on Friday, as a slowdown in the US jobs markets put investor concerns of interest rate rises at ease for the time being.

Nonfarm payrolls in the world's biggest economy rose by about 150,000 in October, the Bureau of Labour Statistics reported on Friday, slowing more than expected.

The unemployment rate hit 3.9 per cent, the highest in nearly two years, as monthly wage growth slowed.

The report underscores hopes that the US Federal Reserve is finished raising interest rates to fight off high inflation.

The US Federal Reserve on Wednesday left interest rates unchanged at between 5.25 per cent and 5.50 per cent for a second time, leaving them at a 22-year high amid “elevated” inflation levels, but hinted it would still raise them if required.

However, while apparently moving in a positive direction, markets should wait for more indicators to truly gauge the state of the economy, said Craig Erlam, a senior market analyst at Oanda.

“Some markets, basically since the Fed made its announcement and [chairman Jerome] Powell spoke, have just been on a real positive upwards trajectory,” he said in a podcast.

“But has anything fundamentally changed? I don't think so. Nothing that the Fed said we'd knew about; it was kind of baked in, regardless of how the markets reacted.”

He specifically pointed to two more inflation reports and another jobs update before the next Fed meeting, scheduled on December 12 and 13, to see “if we are moving in the right direction”.

“The jobs report [on Friday] is a good one but … this could easily be a bump in the road. I just don't think it's a game changer, but the markets are behaving like it is,” Mr Erlam said.

At the close on Wall Street, the S&P 500 rose 0.9 per cent – its best finish in 2023 – the Dow Jones Industrial Average added 0.7 per cent, and the tech-heavy Nasdaq Composite jumped 1.4 per cent.

For the week, the S&P 500 and Nasdaq gained 5.9 per cent and 6.6 per cent, respectively, for their best close since November 2022.

The Dow rose 5.1 per cent for its best finish since October 2022.

Year-to-date, the three indices are up 13.5 per cent, 28.8 per cent and 2.8 per cent, respectively.

In Europe, London's FTSE 100 shed 0.4 per cent at the close, while Frankfurt's DAX rose 0.3 per cent, and Paris's CAC 40 declined 0.2 per cent.

In Asia, Hong Kong's Hang Seng Index surged 2.5 per cent, and the Shanghai Composite added 0.7 per cent. Tokyo's Nikkei 225 was closed for a holiday.

In commodities, oil prices slid on Friday and posted a second week of losses in a row after the Israel-Gaza war remained contained.

Brent shed 2.26 per cent, or $1.96, to settle at $84.89, while West Texas Intermediate slipped 2.36 per cent, or $1.95, to finish at $80.51. On a weekly basis, the benchmarks lost 4.8 per cent and 6 per cent, respectively.

Gold, meanwhile, gained as the dollar retreated on hopes that the Fed was finished with raising interest rates.

Spot gold added nearly 3 per cent, or $5.70, to settle at $1,999.20 an ounce. It earlier hit a session high of $2,003.69.