By Caroline Valetkevitch
NEW YORK (Reuters) -The Dow Jones hit a record high on Friday and the Nasdaq ended with a gain of more than 1%, after a stronger-than-expected jobs report reassured investors worried the economy was becoming too weak.
U.S. job growth rose the most in six months in September, and the unemployment rate fell to 4.1%, the report showed.
The data “basically shows us that economic activity is likely to remain at a solid pace in the fourth quarter,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“It’s a good surprise, but I also think this could now slow the pace of rate cuts.”
Traders further cut their bets on a 50 basis point cut at the Federal Reserve’s Nov. 6-7 meeting. Traders now estimate just an 8% chance of a 50 basis point rate cut, down from about 31% earlier on Friday, CME Group’s (NASDAQ:) FedWatch Tool showed.
The Fed started a monetary easing cycle last month with a 50 basis point rate cut.
Small caps and financials performed better: the index rose by 1.5% and the financial index rose by 1.6%.
Spirit Airlines (NYSE:) shares fell 24.6%, while other airlines jumped after a report showed Spirit was in talks with bondholders about a possible bankruptcy filing. Frontier Group rose 16.4%, while United Airlines rose 6.5% and Delta Air Lines (NYSE:) rose 3.8%.
The S&P 500 rose 341.16 points, or 0.81%, to 42,352.75, the S&P 500 gained 51.13 points, or 0.90%, to 5,751.07 and added 219.37 points, or 1 .22%, to 18,137.85.
The indexes made only slight gains this week, following concerns about rising tensions in the Middle East. The Dow Jones index rose 0.1%, while the S&P 500 rose 0.2% and the Nasdaq rose 0.1%.
The S&P energy index rose 1.1% that day, along with higher oil prices. Amid concerns about the Middle East, the index rose 7% this week, the biggest weekly percentage gain since October 2022.
US President Joe Biden said if he were in Israel’s shoes, he would consider alternatives to attacking Iranian oil fields. He added that he believes Israel has not yet decided how to respond to this week’s Iranian missile fire.
Shares of Rivian (NASDAQ:) fell 3.2% after the electric vehicle startup cut its full-year production forecast and delivered fewer vehicles than expected in the third quarter.
Third-quarter earnings for S&P 500 companies are expected to begin unofficially next week. Major financial companies are highlighting next week’s reports with JP Morgan Chase (NYSE:), Wells Fargo and BlackRock (NYSE:) will be released on October 11.
Bullish investors are hoping the results will justify the stock market’s increasingly rich valuations. The S&P 500 is up 20.6% so far this year.
U.S. ports on the East Coast and Gulf Coast have reopened, but clearing the cargo backlog will likely take some time.
Advancing issues on the NYSE outpaced declining issues by a ratio of 1.72 to 1; on the Nasdaq, a 2.20-to-1 ratio favored advancers.
The S&P 500 posted 33 new 52-week highs and 1 new low; the Nasdaq Composite recorded 98 new highs and 91 new lows.
Volume on U.S. exchanges was 10.91 billion shares, compared to the full-session average of 12.03 billion over the past 20 trading days.
