Wall Street opened higher on Thursday following the release of September’s nonfarm payrolls report from the Bureau of Labor Statistics (BLS), which indicated that the U.S. economy added 119,000 jobs during the month. This figure significantly surpassed the expected modest gain of 51,000 jobs, prompting traders to increase their bets on a potential interest rate cut by the U.S. Federal Reserve.
The BLS monthly jobs reports are crucial indicators for investors, providing insights into the overall health of the U.S. labor market. Following this report, money markets showed a 37% probability that the Federal Reserve would lower borrowing costs in the upcoming month, a notable increase from the 29% chance observed prior to the data release.
However, the U.S. unemployment rate also rose unexpectedly in September, climbing to 4.4%. The number of individuals classified as unemployed increased to 7.603 million, up from 7.384 million in August, raising concerns about the labor market’s stability.
Seema Shah, chief global strategist at Principal Asset Management, commented on the mixed signals from the jobs report, stating, “Equities and bonds seem to be picking the parts of the jobs release they like. Equities appreciate the stronger-than-expected payrolls, indicating the economy is on firm footing, while the bond market is reacting positively to the increased unemployment rate and the slowdown in wage growth, which may keep the case for a December Fed cut alive.” However, she cautioned that given the ongoing hawkish stance from the Federal Open Market Committee (FOMC), this jobs release is unlikely to sway the committee’s decision regarding a rate cut in December.
Nvidia’s Earnings Boost Market Sentiment
Amidst this economic backdrop, European markets, including the FTSE 100, saw a relief rally, largely attributed to Nvidia’s (NVDA) impressive earnings update released on Wednesday. The U.S. chipmaker reported a staggering 62% year-on-year increase in sales, driven by soaring demand for its chips used in AI systems. Nvidia’s revenue from data center sales reached $51.2 billion, surpassing the anticipated $49 billion.
Looking forward, Nvidia projected fourth-quarter revenue of approximately $65 billion, significantly higher than the $62 billion that Wall Street had been expecting. CEO Jensen Huang highlighted the unprecedented demand for their products, stating, “There’s been a lot of talk about an AI bubble. From our vantage point, we see something very different.” He elaborated on Nvidia’s unique position in the AI marketplace, asserting, “We excel at every phase of AI from pre-training to post-training to inference.”
This strong performance not only lifted Nvidia’s stock by more than 5% but also positively impacted other AI-related companies. For instance, stocks for AMD and Micron rose by nearly 4% and 3%, respectively, following Nvidia’s earnings announcement.
Forecasts for AI Investment Growth
Meanwhile, a report from Swiss bank UBS predicted that global commitments to AI spending could nearly double compared to current projections. UBS estimates that $4.7 trillion will be allocated for AI capital expenditures between 2026 and 2030, with $2.4 trillion already planned based on over 40 announcements made this year. They expect AI-related spending to reach approximately $571 billion in 2026, a revision from an earlier forecast of $500 billion.
This forecast underlines the growing importance of both agentic and physical AI technologies in driving market growth. As AI continues to permeate various industries, the implications for investment, technology development, and job creation are profound.
Overall, the day’s market responses reflect a complex interplay between labor market data, investor sentiment, and the booming AI sector. With mixed signals from the jobs report and robust corporate earnings in the tech industry, traders are actively recalibrating their expectations for the Federal Reserve’s monetary policy in the coming months.
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