The Dow Is Wavering After Jobs Report Disappoints—and What Else Is Happening in the Stock Market Today

It has been a volatile week for stocks as investors fretted over familiar macro themes.

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The stock market dipped on Friday after the September jobs report missed estimates, though the data were better than the headline result would suggest.

The Dow Jones Industrial Average fell 9 points, essentially unchanged, while the S&P 500 dropped 0.2% and the Nasdaq Composite declined 0.5%. All three indexes wavered between mild gains and losses over the course of the day. The 10-year U.S. Treasury yield initially dipped, then rose to 1.6%.

With bond yields higher and the economically-sensitive Dow outperforming the other two major indexes, markets seemed somewhat optimistic on the direction of the economy.

The U.S. added 194,000 jobs in September, missing forecasts for 500,000 and below August’s revised reading of 366,000. The unemployment rate, however, fell to 4.8%.

But there were revisions to summer job gains; there were 169,000 more jobs added in the summer than what initial reports showed, which makes the current job growth picture look much stronger.

“The market’s looking through the headline number,” said Mark Luschini, chief investment strategist at Janney Montgomery. “One [reason] was the revision to the two months number, which cranks the overall number up to 300,000.”

Also, 74,000 jobs were added in the leisure and hospitality industry, while government jobs declined, meaning that some expect total jobs gains to be strong going forward.

“Most of the shortfall was government, which was somehow as negative,” said Rhys Williams, chief investment officer at Spouting Rock Asset Management.

Given these assumptions, the Federal Reserve is still likely to soon begin reducing its bond purchases.

“One weaker-than-expected jobs number is not likely to change the Fed’s thinking,” wrote Richard Saperstein, chief investment officer of Treasury Partners. “The Federal Reserve remains on course to begin tapering its stimulus in November or December.”

Others agree. “The disappointing 194,000 gain in non-farm payrolls in September probably still counts as ‘decent’ enough for the Fed to begin tapering its asset purchases next month,” writes Capital Economics’ economist Andrew Hunter. 

Less Fed bond-buying means less money will move into the bond market, which could drag bond prices lower and lift their yields. Higher bond yields make future profits less valuable, putting outsize pressure on the technology-heavy Nasdaq. 

Overseas, Tokyo’s Nikkei 225 rose 1.3%, as investors reacted positively to Prime Minister Fumio Kishida’s orders for his cabinet to compile economic stimulus measures for an extra budget to be submitted after an election at the end of the month.

The pan-European Stoxx 600 fell 0.3%.

Here are nine stocks on the move Friday:

Alibaba ‘s (9988.H.K.) Hong Kong-listed shares rose 5.6%, while Alibaba ‘s (BABA) U.S.-listed shares were up 3.5% on Friday.

Quidel Corp . (QDEL) stock rose 1.3% after the company said third-quarter sales would be between $505 million and $510 million, ahead of analyst estimates of $251 million, according to FactSet. The company said it has shipped more than twice the number of SARS tests year-over-year. 

Plug Power (PLUG) stock gained 4.2% after getting upgraded to Equal Weight from Underweight at Barclays. 

Union Pacific (UNP) stock rose 2.2% after getting upgraded to Overweight from Neutral at JPMorgan. 

J.B. Hunt Transport Services (JBHT) stock fell 1.9% after getting downgraded to Underweight from Neutral at JPMorgan. 

Lowe’s Cos. (LOW) and Home Depot (HD) fell 0.8% and 0.9%, respectively, after getting downgraded to Hold from Buy at Loop Capital.

Higher crude prices provided a boost for major oil companies, with BP (BP) rising 2.5% and Royal Dutch Shell (RDS.A) lifting 2.2% in London.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com