U.S. stock futures opened narrowly higher on Sunday evening. Just after 6 p.m. Eastern, Dow Jones futures added 53 points, or 0.1%, while S&P 500 and Nasdaq-100 futures each rose about 0.1%. Investors remain weighed down by elevated Treasury yields: the 10-year yield closed Friday near 5.28% after touching 5.34% on Thursday, its highest level since 2002; the 30-year yield stood at 5.57% and the 2-year at about 4.83%.
Friday's September jobs report was a sharp miss. The economy added only 29,000 nonfarm jobs, well short of the 90,000 economists had expected. The unemployment rate rose to 4.2% from 4.1%. Average hourly earnings increased just 0.1% on the month and 3% on the year, the slowest annual pace since May 2021. Combined revisions cut July and August payrolls by 60,000 — July was revised from a gain of 21,000 to a loss of 10,000, and August from 162,000 to 133,000. The three-month average now sits at roughly 51,000 new jobs a month.
The soft employment data prompted traders to slash bets on another Fed rate increase in October. The CME FedWatch tool now puts the chance of no change at the October 28 FOMC meeting near 78%, with only about a 22% probability of a 25-basis-point hike — down from 64% to 70% a week earlier. Markets have not ruled out another move this year, though: a December federal funds rate of 4.00%–4.25% remains the modal outcome at 67.3% probability, implying one further quarter-point increase.
Fed Chair Kevin Warsh said the September decision — a unanimous 25-basis-point increase to 3.75%–4.00%, the first hike since July 2023 — rested on three developments: a stronger economy, inflation that failed to slow, and intensifying geopolitical tensions. "Inflation is the Fed's top priority," Warsh said. Officials are now split on what comes next: New York Fed President John Williams said on September 29 there was "no need for urgency" after the increase; Vice Chair Philip Jefferson said on October 1 that future moves would depend on incoming data; Governor Michelle Bowman sees no need for further hikes.
The week ahead is packed. Monday brings the ISM services index; Wednesday at 2 p.m. Eastern the Fed releases minutes from its September meeting, which traders will mine for clues on how officials are balancing inflation against employment; Friday delivers the preliminary October consumer-sentiment reading from the University of Michigan (forecast 47.6 versus 48.1 prior) alongside Delta Air Lines earnings, kicking off earnings season. Fed officials Bowman, Musalem and Collins are also scheduled to speak. Analysts warn the rally — with the Nasdaq near record highs — stays fragile if long-term yields resume climbing or energy prices rebound. An AP/NORC poll released Thursday found 82% of Americans disapprove of how the cost of living is being handled; with only weeks until the midterms, the economy remains the campaign's central battleground.