Wall Street treated bad economic news as good news Friday, ripping higher after the government reported the U.S. economy added a measly 29,000 jobs in September — barely a third of what economists had expected and weak enough to convince traders the Federal Reserve is done raising interest rates for 2026.

The Dow Jones Industrial Average climbed 250.40 points, or 0.49%, to close at 51,176.96. The S&P 500 gained 56.27 points, or 0.73%, to 7,722.72. The Nasdaq Composite led the charge, jumping 319.27 points, or 1.19%, to 27,190.86, with tech stocks piling in and Nvidia briefly touching a record high during the session.

The move was a classic case of Wall Street cheering weakness in the real economy because it changes the math at the Fed. Economists polled ahead of the report had forecast roughly 85,000 to 90,000 new jobs for September. Instead, the Bureau of Labor Statistics reported just 29,000, while the unemployment rate ticked up to 4.2%, worse than the 4.1% expected. Wage growth was also soft, with average hourly earnings rising just 0.1% for the month — well below the 3.4% pace of inflation, meaning most workers' paychecks are still losing ground in real terms.

Bond Traders Slam the Door on a October Hike

The reaction in the bond market was immediate and dramatic. Odds of an October rate hike, which had sat at 64% just a week earlier, collapsed to roughly 16% once the jobs numbers hit the tape, according to trading desks tracked by Yahoo Finance. The 10-year Treasury yield whipsawed, initially falling on the weak data before settling higher at 5.28% as investors digested what a prolonged pause might mean for inflation further out.

THIS REPORT IS GOING TO PUT THE FED DEFINITELY ON HOLD FOR OCTOBER.

That assessment came from Wharton economist Mohamed El-Erian, one of the most closely watched voices on Fed policy, who said the September numbers effectively take a hike off the table for this month's meeting. A top White House economist echoed that view, telling reporters he does not expect another rate increase before the end of the year.

The jobs report caps a bruising stretch for the labor market, which has cooled sharply since the summer as employers grow cautious amid tariff uncertainty and elevated borrowing costs. For everyday workers, the numbers are a mixed bag at best: a slower hiring pace and stagnant wage growth are hardly good news, even if they happen to be the kind of news that makes stock portfolios fatter.

What happens next largely depends on whether the Fed sees September as a one-month blip or the start of a real slowdown. Markets will get another read on the economy before the Fed's next policy meeting, and any follow-up weakness could fuel even louder calls for the central bank to start cutting rates rather than simply holding steady. For now, Wall Street is enjoying the ride — even if it's being powered by signs of trouble in the job market it usually claims to care about.