Treasury Yields Jumped Back to 16-year Highs After Hiring Surged In September

Barry Adams
06 Oct, 2023
New York City

Stocks headed lower and extended weekly losses after nonfarm payrolls surged in September. 

The S&P 500 index and the Nasdaq Composite are set to extend weekly losses for the fifth week in a row and Treasury yields jumped more than 12 basis points after the release of a hotter-than-expected employment report. 

 

Nonfarm Payroll Surged In September 

Nonfarm payroll additions at all levels of government and by private sector soared 336,000 in September, the U.S. Bureau of Labor Statistics reported Friday. 

Moreover, employment in July and August were revised higher by a combined 119,000. 

The July employment change was revised higher by 79,000, from 157,000 to 236,000, and for August was revised up by 40,000, from 187,000 to 227,000.

The surge in employment reflected the widening demand for employees in the service sector. 

Jobless rate in the month increased to 3.8% and average hourly wages rose 0.2% from the previous month and jumped 4.2% from a year ago. 

Despite the surge in hiring over the last two years, the labor force participation rate has remained nearly unchanged, indicating a steady and elevated level of employees retiring or choosing to leave the labor force. 

Both the labor force participation rate, at 62.8%, and the employment-population ratio,  at 60.4%, were unchanged over the month.

 

U.S. Indexes & Yields 

The S&P 500 index decreased 0.7% to 4,228.04 and the Nasdaq Composite fell 0.7% to 13,126.42. 

The yield on 2-year Treasury notes increased to 5.10%, 10-year Treasury notes inched higher to 4.84% and 30-year Treasury bonds edged down to 5.0%. 

Crude oil decreased $0.01 to $82.31 a barrel and natural gas prices increased 6 cents to $3.23 a thermal unit. 

The dollar index edged lower to 106.80, the level last seen in November 2022 and extended gains from the low of 99.85 on July 13, 2023.  

 

U.S. Stock Movers 

Koninklijke Philips NV declined 9.4% to $17.86 after the U.S. FDA said the Dutch medical devices company's recall of sleep apnea product recall fell short of the agency's expectations. 

Levi Strauss & Company decreased 1% to $13.08 after the apparel maker reported third-quarter revenue below market's expectations and the company also lowered its full-year revenue outlook. 

Tesla Inc fell 2.5% to $255.14 after the electric vehicle maker lowered prices on its Model 3 and Model Y vehicles in the U.S. 

The move follows the recent weakness in U.S. sales after the company reported weaker-than-expected sales in the third quarter. 

Aehr Test Systems plunged 16.1% to $37.06 despite the company reporting quarterly earnings and revenue ahead of expectations set by analysts. 

The semiconductor testing equipment maker said net revenue in the fiscal first quarter ending in August jumped 93% to $20.6 million and net income advanced to $4.7 million from $.0.59 million and diluted earnings per share rose to 16 cents from 2 cents a year ago. 

The company reiterated its revenue in the fiscal year 2024 ending in May 2024 of  $100 million and net income of $28 million.