Mega-cap tech stocks, including Microsoft, Apple, and Nvidia, propelled U.S. stock benchmarks higher, with the S&P 500 gaining 0.5% and the Nasdaq climbing 1.6% on the week. This rally followed a stronger-than-expected nonfarm payrolls report for September, with 336,000 jobs added and a steady unemployment rate of 3.8%. However, market opinions on the outlook diverged, with some strategists suggesting it’s the right time to buy global stocks while others predict a bond rally next year as higher interest rates may trigger a recession.
Credit markets faced their worst week since the global banking turmoil in March, as a strong jobs report pushed Treasury yields to their highest levels since 2007. The benchmark 10-year note saw yields spike up to 4.885%, causing pain for corporate borrowers. The primary junk-bond market saw no new issuance this week, and high-yield bonds had their worst weekly loss since February. The U.S. and Canadian 10yr government yields both ended the week 22bps and 13bps higher respectively.
Oil futures saw a modest uptick on Friday, with U.S. prices gaining 0.6%, but they posted an 8.8% loss for the week. This drop was partly attributed to a weekly increase in gasoline inventories, signaling a correction in the oil market. However, strong employment numbers suggested that despite initial concerns about interest rates, the underlying economy remained robust, potentially supporting oil demand. Oil settled at $82.83 per barrel.