September Jobs Report
September non-farm payrolls rose 29,000, far below expectations. The unemployment rate ticked up to 4.2% from the prior month. Wages rose 0.1% month over month, and year-over-year wage growth slowed from 3.1% to 3%. Wage growth is the inflation signal inside the payroll data, and it has fallen over the last few months. A mild report gave the market energy to move higher, because it did not push interest rates up.
The higher 4.2% jobless rate is easier to accept because the labor force participation rate rose two tenths, from 61.6% to 61.8%. More people entered the workforce, so a one-tenth rise in unemployment carries less weight.
Reaction across markets: crude oil, already down, fell further. The 10-year Treasury yield slid lower on the news. Both moves gave stocks a boost. The day could still turn volatile.
On the sector breakdown, healthcare, construction, and manufacturing all rose, but by small amounts. One large paragraph in the report noted little change month to month across roughly 13 sectors. Professional and business services and financial activity were the weaker parts. Leisure and hospitality looked strong, adding more than 10,000. The bottom line: the US economy is healthy, even while a crude oil supply shock drags.
The Fed Outlook
Cooling wage growth at 3% supports the view that the Fed can pause in October. Several Fed members this week tempered expectations. Philip Jefferson said adjustments need careful assessment and more time. John Williams said there is no urgency. Michelle Bowman said there is no urgent need. Acting right before the midterm elections would push the Fed too close to politics.
The CME FedWatch tool for October dropped to 16%, and after this soft jobs number that reading sits close to zero. December probabilities are set to fall as well. This eases pressure on yields and future rate moves.
Lori Logan stays a consistent hawk; she dissented even while the Fed was lowering rates. One data point rarely shifts an entrenched member, hawkish or dovish, but the stock market reads the overall pressure on rates as fading.
A conversation with Susan Spence, chair of the ISM PMI manufacturing survey, pointed to mostly positive numbers with some slower growth. Employment was expanding again. New orders showed bright spots, but backlogs and supply chain issues remained. She wanted a couple more months of trend data before drawing firm conclusions.
Crude Oil
Crude oil trades around $88.92 a barrel, down 3.8% on the week. The drop takes pressure off the broader market, since much of recent inflation came from crude and energy. Reuters reported that European Union member states were discussing a French proposal to release more diesel reserves, following pressure from the Trump administration. Diesel prices matter because most large trucks run on diesel, so they feed into the cost of moving goods. Oil futures trade on sentiment, and sentiment on energy is shifting lower.
Nike (NKE)
Nike (NKE) sits at 13-year lows, down nearly 10% in morning trade. The company beat on earnings per share but keeps losing on sales. Revenue was $11.22 billion, down 4%. Diluted earnings per share came in at 48 cents, above expectations. Net income was $712 million, down 2%. Gross margins expanded. Management flagged cautious comments, planned layoffs, and workforce reductions, with full-year guidance expected to decline by a high single-digit percentage. The turnaround under Elliott Hill is not here yet.
Anthropic IPO
Anthropic is moving closer to an initial public offering and starting its roadshow. It plans to meet prospective investors on October 14th. According to people familiar with the matter, the IPO could come as soon as the week of November 9th. To land a 2026-style IPO, the deal needs to launch before the holidays, or some investor interest will fade. Getting it going in early November keeps it clear of the holidays, and that week looks to be progressing normally.
Tesla (TSLA)
Tesla (TSLA) is going through a major transition. The stock traded up about $7 pre-market, roughly 2% higher, partly on deliveries and partly on the broader market gains. Third-quarter production was 464,391 vehicles, with deliveries of 486,000. Energy storage was another bright spot, with 13.7 gigawatt-hours of energy storage products deployed.
