Dow Jumps 250 Points After Steady Jobs Report

® StockMarketNews.Today ® — U.S. stocks rose on Friday as moderate jobs growth in September offered some relief from a spate of dismal economic data this week that has rankled markets and fueled concerns that the United States was sliding into a recession. September jobs numbers are likely to keep open the prospect that the Federal Reserve considers another interest-rate cut this month.

The U.S. jobs report—which showed a gain of 136,000 positions and unemployment falling to 3.5%—does little to alter a debate over whether the Fed should lower its benchmark rate at its Oct. 29-30 meeting. The report showed the U.S. economy has retained resilience amid a broader global slowdown. But recent surveys of manufacturing and service-sector activity have hinted at future weakness. Friday’s jobs report should quiet those fears for the moment.

Fed officials have been mum so far about plans for the October meeting, neither explicitly signaling a rate cut nor pushing back strongly on rising expectations from investors. Recent data disappointments indicate a global growth slowdown, amplified by uncertainty over the U.S.-China trade war, may be taking a greater toll on economic activity, consumer confidence and business investment. All of this has led investors in recent days to anticipate another rate cut later this month.

Fed Vice Chairman Richard Clarida didn’t expressly support or reject those expectations at an appearance Thursday evening hosted by The Wall Street Journal. “I do think the economy is in a good place,” he said. Mr. Clarida said he was very happy that the Fed had recently lowered its policy rate because “that put us in the place we need to be.”

He offered less about future decisions. “We are not on a preset course,” he said, adding that officials “will act as appropriate” to sustain recent growth. The jobs data did little to change market expectations about the Fed’s interest-rate plans. Trading in futures markets showed investors placed a roughly 80% probability on Friday morning of another rate cut this month, down from 90% on Thursday but up from 50% one week ago, according to CME Group.

Fed officials were divided at July and September meetings over whether lower interest rates were warranted. A solid majority of officials, led by Fed Chairman Jerome Powell, argued that steps to lower borrowing costs would help support an economy facing a global slowdown and increased risks.

Mr. Powell has argued that the costs of taking out an insurance policy against a sharper-than-anticipated slowdown are low at a time when inflation pressures have been tepid. Other colleagues have said that waiting for signs of a sharper deceleration in hiring is risky, saying that by the time labor markets weaken it may be too late for the Fed to stop a downturn.

“The idea that if you see trouble approaching on the horizon, you steer away from it if you can, I think that’s a good idea in principle,” Mr. Powell said at a news conference last month. “Applying that principle in a particular situation is where the challenge comes,” he said.

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Several colleagues on the rate-setting Federal Open Market Committee have resisted rate cuts. They say that despite rising risks to growth and a slowdown in manufacturing and businesses’ investment, the rest of the economy is strong enough to motor through. These critics have warned that cutting rates without stronger evidence of a slowdown could spur financial bubbles or waste ammunition needed to fight a downturn should it arrive.

Friday’s employment report provides grist for both camps. Wage growth slowed in September, indicating a possible decrease in demand for new labor. Hourly wages rose 2.9% for the 12-month period ended September, down from 3.2% in August and 3.4% in February.

The growth in average weekly earnings also cooled. Weekly wages rose 2.6% over the year ended September, the smallest gain in nearly two years and down from a recent high of 3.6% last October. Slower earnings growth should tamp down worries about rising inflation.

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Still, hiring has been strong enough in recent months to lower the unemployment rate, a sign of steady demand for labor. On average, employers have added nearly 157,000 jobs a month over the past three months, down from 189,000 for the year-earlier period. And the share of people 25-to-54 years old who are employed rose to their highest level since March 2007.


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